This
application for leave to appeal requires us to consider the status,
legality and effect of certain rules (the Rules) that regulate
a
class of moneylenders who have come to be known as micro-lenders.
As the term suggests, micro-lenders make relatively small
loans.
But this is not the only relevant characteristic of these
institutions. They differ from other lending entities in two
other
material respects. First, they are allowed to lend without being
bound by the terms of the Usury Act1
and, in particular, at finance charges that are much higher than
those that all other moneylenders may charge2
in terms of that Act. Secondly, and perhaps more importantly, their
customers are mostly poor people.

The
applicant, AAA Investments (Proprietary) Limited (AAA Investments),
a micro-lender operating in the Eastern Cape Province, vigorously
contests the validity of these Rules. Their genuineness is defended
with equal tenacity by the first respondent, the Micro Finance
Regulatory Council (the Council) which has become responsible for
the regulation of the micro-lending sector. The Council purports
to
have made the Rules and to administer them in the course of
fulfilling this regulatory responsibility.3
The second respondent is the Minister of Trade and Industry (the
Minister) who is joined by reason of the interest of that office
in
the outcome of this case.

The dispute between AAA Investments and the Council broadly turns
firstly on whether the Constitution4
applies to the Rules or whether the scope of the Rules is so private
that the Constitution does not apply to them at all. Secondly,
and
if the Constitution does apply, we must decide whether the Rules are
consistent with it.

The constitutionality of these Rules has been debated in both the
Pretoria High Court (the High Court) and the Supreme Court of
Appeal
(SCA). These judgments are not in harmony. The High Court5
held that the making of the Rules represents an exercise of public
power and that the Rules are constitutionally objectionable
because
the Council improperly exercised unauthorised public legislative
power in making them. It accordingly declared the Rules
to be
inconsistent with the Constitution. The SCA6
however concluded that the Rules operated only in the private sphere
by reason of a contractual relationship between the Council
and
those micro-lenders registered with it. That Court found no basis
upon which these Rules could be validly impugned, apparently
on the
basis that the Constitution was not applicable. It accordingly
reversed the High Court order. AAA Investments wishes to
appeal
against this judgment and applies for the necessary leave.

Background

It
is universally accepted that money lending transactions are
susceptible to abuse mainly because borrowers are usually in a much
weaker position than lenders. Moneylenders can therefore easily
exploit this vulnerability of the borrower, and some have been
guilty of serious impropriety so frequently as to give rise to
considerable concern. Moneylending transactions are therefore
legitimately subject to legislative control in most parts of the
world.

South
Africa is no exception. Here, all contracts that serve as vehicles
for advancing money on loan are tightly controlled by
the Usury
Act.7
Some of its important measures are highlighted. The Act
extensively regulates three types of transactions aimed at advancing
finance, namely, moneylending transactions, credit transactions and
leasing transactions.8
I will refer to these transactions collectively as loan contracts.
The annual finance charge levied in a loan contract may not,
on pain
of punishment, exceed that prescribed from time to time by the
Minister9
and must be disclosed.10
The Act places limits on the sum that may be recovered in various
circumstances11
and mandates that reduced amounts are payable if there is advance
payment as well as in related circumstances.12
The Usury Act also ensures that overpayments by the borrower are
recoverable,13
that those who advance loans provide certain information14
to recipients15
and that recipients of loans receive some protection when faced with
court actions for recovery.16
It is also of significance that the Act provides for certain powers
of inspection,17
for certain information to be furnished to a state official by those
advancing loans,18
as well as for certain penalties to be visited upon lenders who do
not comply.19
Finally the Usury Act expressly exempts certain categories of
transactions from its provisions.20

I
have said earlier that this case is about the validity of Rules
aimed at the regulation of micro-lenders. Section 15A of the
Act
makes it possible for categories of moneylenders to be exempted from
its provisions by empowering the Minister to determine
the
categories of institutions that may be exempted as well as the
conditions upon which they may be exempted. The section reads:

“The Minister may from time to
time by notice in the Gazette exempt the categories of money lending
transactions, credit transactions
or leasing transactions which he
may deem fit, from any of or all the provisions of this Act on such
conditions and to such extent
as he may deem fit, and may at any time
in like manner revoke or amend any such exemption.”

Section
15A was first introduced into the Act only in 1988.21
The motivation for this appears to have been that potential
borrowers, who were poor and could therefore not provide appropriate
security for repayment, found it difficult (if not impossible) to
obtain loans under the dispensation provided for by the Usury
Act
before the introduction of section 15A. Lenders were apparently
reluctant to give loans to this category of person because,
so they
said, the risk of non-payment was so high that lending money to them
could not be justified. It was suggested by some
lenders that it
might become commercially viable for them to advance loans to
potential borrowers who were high risk if it was
made possible for
them to charge higher interest rates.

The
first Notice exempting certain categories of money-lending
transactions22
was published four years after section 15A was passed.23
That Notice exempted a certain category of micro-lenders from all
the provisions of the Act subject only to two conditions. The
first
was that there should be a “cooling off period” of three days
within which the transaction could be terminated by the
borrower
without any adverse consequences.24
Secondly, the lender was obliged to furnish to the borrower
particulars of the amounts of the principal loan and the finance
charges respectively.25
It is fair to conclude that this Notice made it possible for
moneylenders to advance small loans (that would largely be required
by poor people) free from almost all of the constraints of the Usury
Act and unbounded by any finance charge limit at all!

The
micro finance industry had been legitimated. It grew exponentially.
Many relatively poor people were now able to secure loans
from
willing lenders; lenders could now make limitless profit, who were
subject to very little (if any) control. This brought
negative
consequences. Unsurprisingly, complaints of abuse arising from
micro finance loans were directed by borrowers against
lenders with
rapidly increasing frequency.

The
office of the Minister began to consult with role players concerning
the best way in which the micro-lending industry could
be regulated
in order to provide much needed protection for poor borrowers. The
result of this consultation was the decision that
micro-lenders and
other role players should have some say in the regulation of this
industry jointly with government. The Minister
also concluded that
some minimal regulation of the industry had to be made compulsory by
law.

The upshot of all this was the introduction of a new Exemption
Notice (Exemption Notice) in June 199926
issued pursuant to section 15A of the Act. As will be seen later,
the Council purports to have made the disputed Rules pursuant
to
this Exemption Notice. This Exemption Notice is much more stringent
than its predecessor. It exempts any moneylending transaction
where
the loan does not exceed R10 000 and which is payable within a
period of thirty six months from all of the provisions of
the Act
except for sections 13, 14 and 17(A).27
Moneylenders must comply with two conditions in order to qualify
for the exemption. They must:

register
with a regulatory institution approved by the Minister;28
and

comply
with the Rules contained in Annexure A to the Exemption Notice (the
Minister’s Rules).29

The
Exemption Notice expressly imposes certain duties on the regulatory
institution30
which has to ensure that lenders registered with it comply with the
Minister’s Rules as well as accreditation criteria approved
by the
Minister.31

It
is interesting that as at the date of the publication of this
Exemption Notice, the Council had already been formed. The Council
was incorporated as a limited liability company not for gain before
the Exemption Notice had been promulgated.32
This followed upon sustained interaction between ministerial
representatives and various other role players. Indeed, the Council
had already made an application to become a regulatory institution
before the date of the publication of the Exemption Notice.33
The original subscribers to the Council were the Association of
Micro Lenders, the Banking Council of South Africa, the Consumer
Institute of South Africa, the Department of Trade and Industry, the
Housing Consumer Protection Trust, Khula Enterprise Finance
Ltd, the
Legal Resources Centre, the Micro Enterprise Alliance, the National
Housing Finance Corporation Ltd and the South African
Reserve Bank.
AAA Investments was at all relevant times a member of the
Association of Micro Lenders. It is noted that the subscribers
to
the Council comprised representatives of government, moneylending
institutions, and community bodies concerned with consumer
protection. The Council’s memorandum and articles of association
proclaimed the Council as a regulatory institution and authorised
it
to make rules. After its incorporation the Council did make certain
Rules (the first set of Rules).34
These were more extensive than the Minister’s Rules. Thereafter
the Minister published a Notice declaring that the Council
would be
the regulatory institution for purposes of the Exemption Notice.35

This
meant that all micro-lenders who wished to qualify in terms of the
Exemption Notice had to be registered with the Council in
order to
bring themselves within the terms of the exemption. AAA Investments
and many other micro-lenders registered with the
Council.36
There were apparently no complaints about the Council or its first
set of Rules until the Council began a process of consultation
for
the adoption of the Rules that are under attack in this case. The
applicant opposed the adoption of the Rules by submitting
detailed
written representations directly to the Council and through the
Association of Micro Lenders, a subscriber to the Council
of which
the applicant was a member. The Council nonetheless adopted the
Rules.37

The
duties imposed on the Council by the Minister

Before
these Rules are described, it is appropriate to set out the duties
that were imposed upon the Council by the Minister in
the Exemption
Notice:38

“‘Regulatory institution’
means a legal entity having a Board of Directors which has, amongst
other directors, equal and balanced
representation between consumers
and the money lending industry and which is approved by the Minister
in writing and published in
the Government Gazette as having the
capacity and the mechanisms in place effectively to –

(a) manage
its business as a regulatory institution with competent management
and staff;

(b) register
lenders in accordance with accreditation criteria approved by the
Minister;

(c) ensure
adequate standards of training of staff members interacting with the
general public;

(d) require
adherence to and monitor and ensure compliance by lenders with this
notice;

(e) fund
itself from contributions by lenders or other sources;

(f) ensure
that complaints from the general public are responded to objectively;

(g) deal
with appeals by lenders and borrowers in respect of any decision of
the regulatory institution or any committee, ombudsperson
or referee
instituted by it;

(h) educate
and inform the general public and lenders in relation to their rights
and obligations under this notice;

(i) annually
publish information regarding the money lending industry, the
services provided, security and/or guarantees required,
types of
charges and the average annual charges levied by each lender in a
comparable format;

(j) collect
and collate information and statistics on lenders and complaints
handled by the regulatory institution, including the
-

(i) number
of complaints lodged and details of the complainant;

(ii) number
of lenders found in breach of this notice and the reasons therefor;

(iii) names
of lenders against whom substantiated complaints have been lodged and
the number and nature of complaints;

(iv) response
time to resolve complaints;

(v) the
number of items monitored under each category;

(vi) the
number of breaches detected through monitoring;

(vii) the
number and nature of sanctions imposed; and

(viii) the
number of decisions appealed against and the outcome thereof;

(k) annually furnish the
Minister with a detailed report on lenders, its activities and
functions and any other information that the
Minister may require;

(l) review its own
effectiveness and the effectiveness of this notice and to recommend
appropriate changes to the Minister”.

The
Rules

The
Rules are wide ranging in their applicability and effect. They
describe their own status at the very outset as comprising part
of
“the agreement between the Council and the lender”.39
The Rules are defined as including the Minister’s Rules.40
The accreditation criteria, annexed to the Rules, are in effect
pre-conditions for registration.41
It will be remembered that accreditation criteria must be approved
by the Minister.42
It is perhaps as well to repeat that lenders qualify for an
exemption in terms of section 15A of the Act only if they are
registered
with the Council. It will be useful to describe the
accreditation criteria and the Minister’s Rules before venturing
into a
short account of the Rules themselves.

The criteria which must be approved by the Minister require that the
lender must:

conduct
business in the category of money lending transaction exempted;43

commit
itself to complying with the Exemption Notice and the Rules of the
Council;44

ensure
that those who are in control of its business operations are fit
and proper.46

The
Minister’s Rules impose certain obligations on lenders in relation
to the conclusion of moneylending transactions. These
Rules concern
themselves with the relationship between lenders and borrowers and
have very little to do with regulatory institutions.
Briefly they
pertain to:

obliging
the lender to keep certain information received from the borrower
confidential unless the borrower consents to disclosure;47

disclosure
of certain information by the lender to the borrower, the use by
the lender of standard agreements containing certain
information,
and the process of the resolution of disputes between the borrower
and the lender;48

restrictions on the consideration that may be charged by the
lender;49

a cooling off period within which the loan agreement may be
cancelled by the borrower with impunity;50
and

Before
turning to the Rules, we must remind ourselves of the tasks imposed
on the Council by the Exemption Notice. It had to ensure
that the
terms of the Exemption Notice were complied with. To this end, the
Council was obliged to have sufficient mechanisms
in place to compel
compliance with the Exemption Notice and the Minister’s Rules.
Finally the Council had to ensure that all
lenders who wish to
register with the Council fell within ministerially approved
criteria.

In broad terms the Rules themselves are concerned with:

the registration of membership of lenders and the rights and
obligations of both the members and the Council consequent upon
registration;52

compliance
standards in relation to lending activities including the
prohibition on reckless lending;53

the
training, conduct and conditions for the appointment of their
employees and agents by lenders;54

the obligations of the lender to provide extensive information
concerning lending transactions to the National Loans Register
and
to access information from that Register in the process of the
approval of loans;55

detailed
specifications relating to the accounting and auditing practices of
lenders;56

the submission by the lender of certain statistical and other
information to the Council quarterly and annually;57

expansive
rules for the conduct of disciplinary proceedings arising out of
the conduct of lenders58
and appeals by lenders against findings adverse to them;59

limits
on finance charges and the way these must be calculated including
conditions for compounding;60
and

AAA Investments contended in the High Court that the Rules were all
invalid because the Council, in making them, unlawfully and
unconstitutionally assumed and exercised legislative power. It also
attacked some specific Rules, particularly those concerned
with the
National Loans Register,62
as being inconsistent with the Constitution because they offended
the right to privacy of both lenders and borrowers. I have already
said that the High Court held that in making the Rules, the Council
exercised public power. The Constitution therefore applied
to this
rule-making power and to the Rules themselves. The High Court then
set both the Rules and the first set of Rules aside
as
unconstitutional on the basis that:

the
Council exercised legislative power (a power conferred on the
national and provincial legislatures as well as the municipal
councils by the Constitution);63
and

the
power to make the Rules had not been properly delegated to the
Council by the Notice.64

In the
circumstances, the High Court found it unnecessary to adjudicate the
privacy attack.

It
is necessary to focus on the reasoning that led to the conclusion
that the Council exercised public power. The High Court observed
correctly that private institutions were increasingly being used to
perform state functions65
and, relying on the definition of an organ of state in the
Constitution,66
reasoned that the nature of the functionary was of little
consequence. On this basis, the crucial inquiry for the High Court
was whether the Council exercised public power because, if this was
so, the fact that it was authorised by its memorandum and articles
of association would make no difference.67

The
High Court concluded that the Council exercised public power for the
following reasons: first it emphasised that every person
or
institution who wished to become part of the micro-lending industry
had no choice but to register with the Council, that the
rules were
binding on both lenders and borrowers and that they affected the
public in general.68
Secondly, the court placed reliance on the consideration that the
sanction for non-compliance with the Rules included the possibility
of the cancellation of the registration of a lending business with
the Council; this in turn would result in the inability of that
entity to carry on its business as a micro-lender.69
The third and final basis for the conclusion of the High Court was
that the rules were integral to the regulation of the Exemption
Notice and are “part of the governmental regulation of
micro-loans”.70

The
SCA

The
SCA held that the attack on the Rules on the basis that the Council
was not authorised to make them was misconceived on the
following
basis:

the
Council is not a “public regulator” that exercises authority
unilaterally but is a “private regulator” of lenders
who
consent to its authority;71

to
the extent that the consent of the lender might be said to be
forcibly extracted, the source of that coercion was not the
Council’s Rules but the Exemption Notice which obliged
micro-lenders to register in order to qualify for the exemption;72

the
validity of the Rules are therefore to be determined “with
reference to trite principles of company law and in particular,
whether it was empowered by its memorandum of association to do
so”;73
and

The SCA
too did not consider the privacy attack because, on its reasoning,
the Council was not obliged to act consistently with the
privacy
protection in the Constitution.75
An important consequence of the reasoning and conclusion of the SCA
is that neither the rule of law and the principle of legality,
nor
the Bill of Rights had any application to the wide ranging Rules made
by the Council to regulate the micro-lending industry;
Rules that had
a profound effect on the activities of lenders and borrowers alike.
The Council is, on the SCA judgment, free to
make whatever Rules it
chooses consistently with its memorandum and articles of association.

The
issues

It is apparent that the issues before us are: (a) whether the
Constitution, the legality requirement and the privacy protection
in
particular, applies to the Rules, or to frame the issue in the way
in which it apparently came before the High Court and SCA,
whether
the Council exercised public power or private power in making the
Rules; (b) if the Council exercised public power, whether
the power
exercised was legislative in the sense of the law-making powers
exercised by Parliament, the provincial legislatures,
and municipal
councils; (c) did the Council have the power to make the Rules
pursuant to the Exemption Notice; and (d) specific
issues about
whether certain Rules violate the right to privacy.

The
interests of justice

This
Court will grant leave to appeal only if it is in the interests of
justice to do so.76
There are significant differences between the judgment of the SCA
and that of the High Court. The questions whether the Council
exercises public or private power in the circumstances of this case,
and more importantly, whether the Constitution governs the
Rules and
acts as a constraint upon the Council, raise constitutional issues
of grave importance to our democracy. Both judgments
have
significant implications for the future. The judgment of the SCA
carries the consequence that binding rules made by a private
entity
governed by a memorandum and articles of association in the process
of regulating a sector of the South African commercial
enterprise,
in accordance with the terms of a ministerial notice (subordinate
legislation), will not be subject to the privacy
protection in our
Bill of Rights or indeed the protection conferred by any of its
provisions. This is a far-reaching result.
On the other hand, the
High Court judgment would render unconstitutional any rule of a
public character made in terms of a ministerial
notice even if the
rule was fully consistent with the notice. This conclusion, too,
has sweeping implications for the way in which
the government may
regulate in the public interest. There are therefore compelling
reasons for the conclusion that it is in the
interests of justice
for us to hear the appeal in respect of this aspect of the case.

We
must however bring into the equation the question of mootness in the
process of deciding the interests of justice issue. By
the time
this case was heard by the SCA, the Exemption Notice had been
replaced by a new Exemption Notice which in effect set out
the Rules
that had been determined by the Council and which are under attack
in this case, as rules prescribed by the Minister.77
The Council’s Rules had become the Minister’s Rules. The
Council’s contention in the SCA that this rendered the issue
before that court moot was rejected78
and not raised again in this Court. However the possibility of the
issue in relation to the Rules contested in this Court being
moot
because they have been overtaken by the new Notice is so strong that
this factor must be brought into account in the interests
of justice
analysis.79
The issues may well be moot. Nonetheless, there are two
conflicting judgments on these issues and, if we do not consider
this
aspect of the case, the judgment of the SCA with all its
implications for future regulation would remain binding. In all the
circumstances,
I would hold that these issues are so crucial to
important aspects of government as well as the rights contained in
the Bill of
Rights that it is in the interests of justice to grant
leave to appeal. Neither the judgment of the SCA nor that of the
High Court
can be said to be unassailable. As will appear from what
comes later,80
different considerations apply in relation to whether we should
evaluate the specific rules consequent upon the privacy complaint.

Does
the Constitution apply to the Council?

AAA
Investments challenged the correctness of the reasoning of the SCA.
Its counsel supported the reasoning of the High Court and
emphasised
that any micro-lender has in reality no choice but to register with
the Council. Whatever the source of the coercion
might be, they
submit that the reality is that there is coercion. They point to
the concession by the Council before the SCA that
it (the Council)
was indeed an organ of state81
and contend that this concession inevitably leads us to the
conclusion that the Council exercised public power.

The
exercise of public power82
is always subject to constitutional control and to the rule of law
or, to put it more specifically, the legality requirement of
our
Constitution.83
The Council would therefore be bound by this requirement if it
exercised public power. Whether the Constitution is applicable
to
the Rules cannot be determined solely by asking whether the exercise
of power in a particular case is a public power. The Constitution
is specific about when the Bill of Rights applies. Section 8(1) of
our Constitution expressly provides that “[t]he Bill of Rights
applies to all law, and binds the legislature, the executive, the
judiciary, and all organs of state.” It is worth remembering
that
any finding that a rule making entity does not fall within this
category may not of itself have the consequence that the Bill
of
Rights is not applicable to it. Our Constitution also provides that
“a provision of the Bill of Rights binds a natural or
juristic
person if, and to the extent that, it is applicable, taking into
account the nature of the right and the nature of any
duty imposed
by the right.”84
It would therefore seem that the SCA may be incorrect in concluding
that the privacy attack became irrelevant on the finding that
the
Council performed a private function in a private sphere. Our
Constitution, unlike many others, contemplates that some of
the
rights in the Bill of Rights may apply horizontally as well as
vertically.

We know that the Rules were made by the Council. The capacity in
which the Council made these Rules is of some significance.
It must
be accepted for present purposes that the Council does not
constitute or represent the legislature or judiciary. At first
blush the inter-related questions appear to be whether the Council
made the Rules as an extension of the executive or whether it
acted
as an organ of state in doing so. In either case the rule of law
and the privacy protection in the Bill of Rights applies.
It
appeared to be common cause in argument that the Council was an
organ of state. An organ of state is defined in section 239
of the
Constitution as:

“(a) any department of state
or administration in the national, provincial or local sphere of
government; or

(b) any other functionary or
institution –

(i) exercising a power or
performing a function in terms of the Constitution or

a provincial constitution;
or

(ii) exercising a public power
or performing a public function in terms of any

legislation,

but does not include a court or
a judicial officer.”

The
meaning and application of section 8(1) of the Constitution read with
this definition should in my view be decided after reference
has been
made to approaches to relevant questions in South Africa and abroad.

Approaches
to public power, governmental power and judicial scrutiny

In the pre-constitutional era in South Africa, the nature of
institutions and the way in which they exercised their power became
relevant in the context of determining whether particular decisions
were subject to judicial review. The Court in Dawnlaan85
had to consider whether the decisions of the Johannesburg Stock
Exchange (JSE) were subject to judicial review. It was necessary
there to decide the correctness of the contention that the decisions
of the JSE were not subject to judicial review because the
JSE was a
private body. The High Court placed considerable emphasis on the
fact that the legislation in terms of which the JSE
had been
established86
requires a stock exchange (a) to be licensed if it was in the public
interest;87
(b) to ensure that its rules safeguard and further the public
interest;88
and (c) to list securities only if that was in the public interest.89
The relevant legislation imposed upon the JSE a public duty to
adhere to these rules and requirements, the court held, and added
that the functions of the JSE affected the public and indeed the
whole economy.90
The court concluded that to regard the JSE as a private entity
would be to ignore commercial reality and the very public interest
that the legislature sought to protect.91
It ultimately held that the decisions of the JSE are subject to
judicial review. The Appellate Division92
confirmed the correctness of this High Court approach in the
WitwatersrandNigel case.93

In
England, too, the nature of institutions required investigation for
the purpose of deciding whether they were subject to judicial
review, or to put it within the terms employed in that country,
whether the decision of an institution was amenable to “the
supervisory jurisdiction of the courts”. An appropriate
description of the approach adopted in that country is described by
the House of Lords in the Panel on Take-overs and Mergers
case.94
The Panel on Take-overs and Mergers though not created by or in
terms of any legislation was an extremely powerful body that had
determined and enforced a code of conduct to be applicable in
relation to take-overs and mergers. It had disciplinary powers and
members of the Stock Exchange who broke its rules could be deprived
of their membership. In the process of re-stating the relevant
factors to be taken into account in considering whether the
institution is subject to judicial review the judgment says:

“[p]ossibly the only essential
elements are what can be described as a public element, which can
take many different forms, and the
exclusion from the jurisdiction of
bodies whose sole source of power is a consensual submission to
its jurisdiction”95(emphasis added).

The
House of Lords concluded that the Panel is subject to judicial
supervision because (a) it performs an important public duty; (b)
its
decisions indirectly affect the general public, some members of whom
may be said to have assented in a technical sense; (c) it
acts
judicially at least in some respects and asserts its purpose to do
equity among shareholders; and (d) the bottom line of the
source of
its power was certain statutory powers exercised by a national
government department.96

The ultimate question to be answered in the United States of America
in any enquiry similar to that with which we are concerned
in this
case is whether their Constitution, and in particular the human
rights protection aspects of it, apply to the actions and
decisions
of certain institutions. Institutions are bound by the Constitution
in the US if, in the final analysis, they can be
said to be “an
agency or instrumentality of the United States”.97
The approach of the US Supreme Court in Lebron98
is useful. That case was a result of a decision by the National
Railroad Passenger Corporation (Amtrak) preventing the applicant
from publishing on a large billboard at a railway station,99
a certain advertisement. The issue was whether the applicant was
bound by and Amtrak could benefit from, the freedom of speech
protection of the United States Constitution. The majority in the
United States Supreme Court100
held that “[g]overnment-created and -controlled corporations are
(for many purposes at least) part of the Government itself”,
for
“[i]t surely cannot be that government, state or federal, is able
to evade the most solemn obligations imposed in the Constitution
by
simply resorting to the corporate form”.101
It was held that Amtrak, though a private corporation, was bound by
the First Amendment on the basis that it was government itself.

The
nub of the majority reasoning, in my view, is to be found in the
statement that Amtrak

“is established and organized
under federal law for the very purpose of pursuing federal
governmental objectives, under the direction
and control of federal
governmental appointees”.102

It is
apparent from this statement that both the nature of the entity and
the nature of the function are relevant. As the majority
judgment
points out the United States Supreme Court has held once103
and “said many times” that private action can sometimes be
regarded as governmental, but cases in this category have not been
consistent.104

We now turn to Canada. The relevant question to be answered there
is whether the Canadian Charter105
applies to the action concerned by reason of the provisions of
section 32(1).106
It is trite in that country that the Canadian Charter applies to
provincial and national government action, not to private action.107
It has been held that two types of Charter breaches may be in
issue: Charter rights may be violated either by legislation or by
action taken under statutory authority.108
It is well-established that the Charter applies to all the
activities of a government entity whether those activities are
described
as private and that the Charter may also apply to
non-governmental entities when engaged in activities that are
governmental in
nature.109
In the former category are cases such as Douglas College,110in which the college in question was held to be founded in terms
of a government statute and under government control. Similarly
in
Lavigne111
it was found that a statutory council was provincial government for
the purposes of the Charter because of the degree of provincial
government control. In this kind of case the fact that the agency
classifies as government is enough. The nature of the function
is
immaterial.

When
it is alleged that the action of a private entity violates the
Charter it must be established that the entity, in performing
the
function, is part of government within the meaning of section
32(1).112
For example, the majority in McKinney113
held that universities, though acting in terms of a statute were
private entities and did not perform governmental action when
determining the mandatory retirement age of 65 years, and in
Stoffman114that hospitals too were not hit by the Charter and did not
perform governmental action when they determined the mandatory
retirement
age. On the other hand, because Douglas College was
regarded as a government entity, its determination of a mandatory
retirement
age was held to be subject to the Canadian Charter.

McKinney
and Stoffman were cases in which private entities (a
university and a hospital respectively) were held to have performed
non-governmental functions.
However, the case of Eldridge
demonstrates well how a private institution can be engaged in the
performance of a public function. Two deaf people alleged that
they
were victims of Charter violations because a private hospital did
not employ sign language communicators. It was held that
the
hospital, while undoubtedly a private entity, essentially
implemented a government program under government subsidy in the
provision of the health service. It was held on this basis that the
Charter rights had been violated by the private hospital in
not
providing sign language communication facilities. Finally it must
be emphasised that for Canada it is not mere public service
or a
public function which is subject to the Charter. The action must be
governmental.115

The
following aspects of the approaches to questions of judicial review
of the exercise of power are notable:

The
public elements of the power exercised or whether the power is
exercised in the public interest or performance of a public
duty
were relevant in the South African pre-constitutional era and are
material in England to the conclusion that the action
concerned is
subject to judicial review.

The
performance of a public service or a public function by a private
entity is not subject to Charter review in Canada.

In
both Canada and the United States, the issue for determination is
essentially whether the entity or the function is governmental.

The
apparent narrowness of the concept of “governmental” has given
rise to much debate in the course of the courts in Canada
in
particular attempting to ensure that government does not evade its
responsibilities through delegation to a private entity.
The
judgments in Canada in particular are difficult to reconcile.

The
approach in South Africa

I
have already said that the exercise of all public power in South
Africa is constrained by the legality principle. It is therefore
not necessary for the purpose of determining whether the legality
principle applies to decide whether the power is governmental.

Section
8(1) of our Constitution renders the Bill of Rights applicable to
the judiciary, the executive, the legislature and organs
of state.
An organ of state is, amongst other things, an entity that performs
a public function in terms of national legislation.
The
applicability of the Bill of Rights to the legislature and to the
executive is unconditional as to function; the Bill of Rights
is
applicable to it regardless of the function it performs.116
Our Constitution ensures, as in Canada and the United States, that
government cannot be released from its human rights and rule
of law
obligations simply because it employs the strategy of delegating its
functions to another entity.

Our Constitution does not do this, however, by an expanded notion of
the concept of government or the executive or by relying on
concepts
of agency or instrumentality. It does so by a relatively broad
definition of an organ of state. This definition renders
the
legality principle and the Bill of Rights applicable to a wider
category of function than the Charter does in Canada. An organ
of
state is, amongst other things, an entity that performs a public
function in terms of national legislation.117
If the Council performs its functions in terms of national
legislation, and these functions are public in character, it is
subject
to the legality principle and the privacy protection. In
our constitutional structure, the Council or any other entity does
not
have to be part of government or the government itself to be
bound by the Constitution as a whole.118
The way is now open to an investigation of the nature of the
Council and the nature of the function it performs.

The nature of the Council as an institution can be disposed of
briefly. An organ of state must perform a function in terms of
national legislation. The Constitution defines national legislation
as including “subordinate legislation made in terms of an
Act of
Parliament”.119
The Exemption Notice is national legislation and the Council does
perform its function in terms of that legislation. The next
question to be answered is the nature of its function. Does the
Council perform a public function?

Section
15A of the Act, in the process of granting the power to the Minister
to exempt certain categories of lending transactions
from the
provisions of the Act, also empowered the Minister to determine the
conditions upon which the exemption was to be made.
The only
purpose of empowering the Minister to determine conditions was to
ensure that the activity of moneylending outside the
terms of the
Act did not go unregulated. The legislative purpose was therefore
regulation by government or executive regulation
of moneylending
transactions that had been exempted from the provisions of the Act.
The Minister decided to determine a regime
that enabled the Council
to regulate this sector of the moneylending industry. The fact that
the Minister passed on the regulatory
duty means that the function
performed must at least be a public function.

The
extent of the control exercised by the Minister over the functioning
of the Council also shows that the function is public rather
than
private. The Minister must determine how the Council was to be
constituted: the Council was to have a “Board of Directors
which
has, amongst other directors, equal and balanced representation
between consumers and the moneylending industry”.120
The Minister also in effect decides what the criteria for
registration would be. This is because he had to approve these
criteria.
Lenders who did not comply with these criteria could not
be registered. The Minister on behalf of the government determined
the
tasks of the Council extensively and obliged it to have
mechanisms to ensure that each of these tasks was properly
performed.
Finally the Minister determined certain minimal rules
which the Council had to enforce. The Council was obliged to
perform the
functions necessitated by the ministerial Exemption
Notice if it wished to remain a regulator. Any action of the
Council inconsistent
with the Notice would certainly fall to be
declared invalid. The Minister controlled the Council and
determined its functions
almost exclusively. No function of the
Council could fall outside the terms of the Exemption Notice.

The SCA relied on the fact that the memorandum of association
empowered the Council to adopt its own rules for concluding that
the
Council was a mere private entity. This conclusion puts form above
substance and disregards the nature of the function that
the Council
must perform. It ignores the reality of almost absolute ministerial
control over the Council’s functions. The provisions
of the
memorandum and articles of association fade into insignificance as
an indicator of the nature of the Council in light of
the
overwhelming evidence of the true nature of the Council’s
functions. The fundamental difference between a private company
registered in terms of the Companies Act and the Council is that the
private company, while it has to comply with the law, is autonomous
in the sense that the company itself decides what its objectives and
functions are and how it fulfils them. The Council’s composition
and mandate show that although its legal form is that of a private
company, its functions are essentially regulatory of an industry.
These functions are closely circumscribed by the ministerial notice.
I strain to find any characteristic of autonomy in the functions
of
the Council equivalent to that of an enterprise of a private nature.
The Council regulates in the public interest and in the
performance
of a public duty. Its decisions and Rules are subject to
constitutional control. The Council is subject to the principle
of
legality and the privacy protection of our Constitution. The SCA’s
decision therefore cannot be upheld.

Did
the Council exercise legislative power not delegated to it?

The
High Court found that the Council exercised legislative power and
that the power to make the Rules had not been properly delegated
to
the Council.121
Each of these propositions must now be examined.

I start with delegation. The High Court held in this regard that
while the Minister might have had the power to make rules binding
on
micro-lenders as a condition upon which the exemption may be
granted, the Minister could not in law properly further delegate
this power to the Council.122
Implicit in this finding is the conclusion that the Exemption
Notice is invalid. This was put to counsel for AAA Investments
who
expressly disavowed any contention to the effect that the Exemption
Notice or the Notice by which the Council had been approved
as a
regulatory institution is invalid. AAA Investments has not and does
not ask for an order declaring either of these Notices
invalid. No
manifest invalidity is apparent. In the circumstances, as counsel
for AAA Investments rightly conceded, this application
and the
correctness of the High Court judgment must be determined on the
basis of the validity of both Notices. Of course we are
concerned
here with the Exemption Notice.

If the Exemption Notice is valid, delegation by the Minister in
terms of the Exemption Notice must also be taken as valid. It
follows that the contention that the Minister had no power to
delegate in the Exemption Notice could not have been validly
advanced
by AAA Investments in the High Court. Nor, absent an
attack on the validity of the Exemption Notice, could the High Court
have
made the finding that the Minister exceeded his power in the
Exemption Notice. In the circumstances, the finding that the
Minister
had no power to delegate cannot stand. This judgment
accordingly proceeds on the basis that the delegation achieved by
the Exemption
Notice is lawful, constitutional and acceptable. Any
consideration of whether the Exemption Notice fell squarely within
the terms
of section 15A is superfluous.

Was
the High Court correct in holding that the Council exercised
legislative power and thereby usurped the power reserved in the
Constitution to Parliament, the provincial legislatures and
municipal councils?123
The Rules are not and do not purport to be national, provincial or
local government legislation. They are binding Rules at what
may be
described as a secondary level. They derive their validity from the
Exemption Notice.124
This judgment holds that the Council exercised public power in
terms of the Exemption Notice. This is a rule-making power aimed
at
fulfilling the duties imposed by the Minister. They are
legislative. But the Council does not, by making rules, or by
exercising
legislative power properly delegated to it, usurp
national, provincial or municipal legislative power. It makes
binding rules
authorised by law and with the force of law in the
fulfilment of a national legislative purpose as set out in section
15A.

Counsel
for AAA Investments made one more submission in relation to the
validity of the Rules as a whole. They contended that the
Exemption
Notice did not empower the Council to make the Rules. In support of
this proposition AAA Investments urged that the
Council was not
authorised to make rules beyond the Ministerial Rules. In other
words, they contend that the Exemption Notice
contemplates that
lenders would be bound by the Ministerial Rules alone. The second
leg of the contention that the Rules were
not authorised by the
Exemption Notice was based on the proposition that there were
certain conflicts between the Minister’s
Rules and the Rules. I
do not agree

As
I have already said, the legislative purpose of empowering the
Minister to set the conditions was, in my view, to make it possible
for the Minister to ensure that the micro-lending industry is
sufficiently controlled and that borrowers are appropriately
protected.
The Minister chose to exercise control over the industry
through a regulatory institution with which all micro-lenders had to
register. The Minister also made certain rules binding on lenders
and then imposed upon the regulatory institution the duty to
enforce
the rules, the obligation to compel compliance with the registration
criteria, and a number of regulatory tasks which the
regulatory
institution had to perform. It must be stressed that the Notice
read together with the Minister’s Rules did not put
in place any
mechanism or process that would facilitate the performance of these
tasks or that had to be complied with in their
performance.

Now the Council, after it had been approved as a regulatory
institution, became obliged to perform these functions. The
obligation
was consistent with the purpose of the legislation. But
it could do nothing to compel compliance. It had been entrusted
with
a series of important tasks; tasks which could be performed
only if a mechanism or set of rules was put in place to enable it to
exercise its regulatory function over moneylenders and to exact
compliance by sanction should this prove to be necessary.

This
may be illustrated by example. The Council must monitor and ensure
compliance with the Exemption Notice125
which of course includes the Minister’s Rules. One of these Rules
restricts the consideration that a lender may charge126
while another obliges the lender to allow a cooling off period.127
Inspection provisions are essential if the Council is to monitor
compliance with these Minister's Rules.128
In addition, disciplinary and appeal procedures extensively
described in the Rules are necessary if non-compliance is alleged.
The Council is obliged by the Exemption Notice to register lenders
in accordance with accreditation criteria approved by the Minister.
Registration procedures and inspections are again necessary for the
proper fulfilment of this obligation. An examination of the
Rules
in relation to the duties imposed on the Council shows that the
duties cannot effectively be carried out without the Rules.

The Exemption Notice must be interpreted so as to
empower the Council to do everything necessary to fulfil the
responsibility imposed
on it. The Rules apply to a limited category
of lenders and are tightly designed for the task at hand. The
micro-lending industry
cannot be regulated without them. The Rules
are within the authority of the Council. It is true that the
authority to make Rules
is not expressly conferred on the Council
but is conferred by necessary implication.129

AAA Investments relies upon three alleged conflicts between the
Rules and the Minister’s Rules to ground the submission that
the
latter could not have authorised the former:

The
first of these, so the submission goes, is between the Minister’s
Rule130
that requires debtor information not to be disclosed without
consent and the Rules131
to the effect that loans may only be granted to borrowers who
consent to the disclosure of certain information concerning the
loan. It is said that the Minister’s Rule carries with it the
consequence that loans may be granted without disclosure of
any
information and that the Rules conflict with the Minister’s Rules
because they require disclosure. The Minister’s Rule
in question
has nothing to do with the conditions upon which loans may be
granted and cannot carry the implications suggested.

The
next alleged conflict is between the Minister’s Rule132
which provides for a three-day cooling-off period and the Rule that
requires the lender to send information about the loan to
a broker
within two days of it being granted. The inconsistency is said to
arise because the relevant Rule prevents the borrower
from
cancelling the agreement on the basis that he does not wish
information about himself to be conveyed to a broker. But,
as has
already been said, the borrower has to consider the issue and
consent to the conveyance of information before the agreement
is
entered into. There is nothing in the Minister’s Rules to
suggest that information about the borrower should not be sent
to
any other agency before the expiry of the three-day period.
Indeed, information concerning the number of borrowers who cancel
agreements before the expiry of the cooling-off period could well
be very useful in attaining the purposes of the Exemption Notice
and the Minister’s Rules.

Finally
the suggestion is that the Rules conflict with the Minister’s
Rule133
that requires the lender to be given at least 28 days notice before
any adverse information about her is sent to a credit bureau.
The
Rules134
require certain information about borrowers to be sent to
information brokers for the purpose of inclusion in the National
Loans Register without the borrower having been given twenty eight
days notice. AAA Investments says that one of the information
brokers appointed pursuant to the Rules is a credit bureau and the
furnishing of information to that entity for inclusion on
the
National Loans Register without the required notice would be in
conflict with the Minister’s Rules. This contention does
not
begin to hold water because on its own terms AAA Investments does
not rely on any conflict between the Rules and the Minister’s
Rules but alleges a conflict between the Minister’s Rules and
action taken pursuant to the Rules. In any event, as is contended
by the Council, the information to be included on the National
Loans Register cannot be regarded as adverse. Furthermore, the
Minister’s Rules could never have contemplated a prohibition of
information being sent to an entity for inclusion on the National
Loans Register with the express consent of the borrower without
notice to that borrower. The Minister’s Rule was obviously
concerned with preventing adverse information from being sent to a
credit bureau gratuitously. It had nothing to do with information
that had to be sent in the context of the control of micro-lending
transactions in the interests of the borrower and in the public
interest.

There is therefore no basis for upholding the order of the High
Court setting aside the whole body of the Rules as being
inconsistent
with the Constitution. The Court’s order setting
aside the first set of Rules can also not be upheld. The argument
that the
Constitution requires us to interpret the delegation of
power narrowly also falls to be rejected because, in my view, the
only
reasonable construction of the Exemption Notice and the Rules
is that all the Rules are authorised. I cannot conceive of an
alternative
reasonable interpretation that would exclude or limit
the authority of the Council to make its Rules.

Privacy

The
conclusion that the Council did have the power to make the Rules
renders it necessary for us to decide whether the privacy argument
should be considered. The contention is that certain of the Rules
(Rule 6 in particular) offend against the protection of privacy
in
the Constitution.

It is not, in my view, in the interests of justice to consider this
specific attack because the current regulatory regime (as of
the
date of argument) has been replaced. Counsel for the applicant and
for the first respondent told us that new legislation,
the Credit
Act135
and a wholly new regulatory regime was to come into operation on 1
April 2006. However a new Credit Act came into force on 1 June
2006.136

The Rules will soon not be in operation. The transitional
provisions137
do not provide for a continuation of the Rules either. The
regulatory regime postulated by the new legislation differs
fundamentally
from that contained in the Usury Act. The Credit Act
provides for a regulator whose powers and duties are extensively
described
in the Act itself.138
The privacy provisions are very different too. Information about
the borrower can be released only if and to the extent required
by
the Credit Act.139
There is no longer a National Credit Regulator but the Minister
might require the Regulator to establish a single national credit
register.140
Provision is also made for ensuring that credit bureaus have
accurate information,141
for removal of a name from the record of the credit bureaus if the
debt is paid,142
as well as for the borrower to receive appropriate credit
information.143

What
was in the Rules is now contained in the Credit Act. The content
also differs from the Rules. In those circumstances, the
enquiry
into the constitutionality of the Credit Act will be materially
different from the enquiry into the constitutional validity
of the
Rules relating to privacy. A finding in relation to this issue will
therefore be of little practical significance.144
Unlike the issue in relation to whether the rule-making by the
Council constituted private or public power, there are no
conflicting
judgments in existence on the privacy issue.

In all the circumstances, it is in the interests of justice for this
Court not to consider this issue. In that event AAA Investments,
any other lender or any borrower will be free to institute
proceedings to set aside some of the Rules on the basis that they
infringe
the privacy right if so advised. This Court would then
hear any appeal that might eventuate if this is found to be in the
interests
of justice.

The order of the SCA setting aside the order of the High Court must
accordingly be upheld.

Costs

Although
this appeal must be dismissed, this judgment does not uphold any of
the reasoning of the SCA or the order of the High Court
in favour of
AAA Investments. The High Court costs order in favour of AAA
Investments cannot stand. The reasons for the dismissal
of the
appeal are so at odds with the reasoning of the

SCA
that it is not fair, in all the circumstances, for the SCA’s order
in relation to the costs of the appeal in favour of the
Council to
remain undisturbed. Although AAA Investments has not achieved any
success from a practical viewpoint, it has succeeded
in its
contention that the Council exercised public power. On the other
hand, the Council has succeeded in establishing that the
Rules as a
whole were not outside the powers conferred upon it by the Exemption
Notice. Important and complex issues were aired
in all three courts
and I am of the view that AAA Investments and the Council should
each bear their own costs.

Order

The
following Order is made:

1. The application for leave to appeal is granted.

2. The appeal is dismissed except in relation to costs.

3. Each party must pay its own costs in the High Court, in the
Supreme Court of Appeal and in this Court.

I
have had the benefit of reading the judgments of my colleagues
Yacoob J and O’Regan J and, although there is much that I agree
with in both judgments, I am unable to concur fully in the
reasoning of either and the outcome they reach. My approach to the
issues in this matter is substantially similar to that adopted by
O’Regan J and I shall confine myself to those aspects where
this
judgment takes a different view from hers.

As
I see it, the case raises the following issues: first, whether the
doctrine of legality applies to the powers exercised by
the Micro
Finance Regulatory Council (the Council); second, whether the
Exemption Notice1
contains a delegation of power to the Council; and third, if it
does, whether that delegation is lawful. Finally, if the Notice
does contain a permissible delegation, the question is whether any
of the rules made by the Council exceed the ambit of the
delegation.

Mootness

I
agree with my two colleagues that the matter before the Court is
moot but that, because of the importance of the principles
involved, it is nonetheless in the interests of justice to grant
leave to appeal. I have nothing to add to their comprehensive
consideration of the issue.

Legality

This
is a matter of the application of the rule of law and the principle
of legality which flows from the value of the rule of
law enshrined
in section 1 of the Constitution. This Court has held that “[t]he
exercise of all public power must comply with
the Constitution,
which is the supreme law, and the doctrine of legality, which is
part of that law.”2
The doctrine of legality, which requires that power should have a
source in law, is applicable whenever public power is exercised.
Private power, although subject to the law and in certain
circumstances the Bill of Rights, does not derive its authority or
force from law and need not find a source in law. Public power on
the other hand can only be validly exercised if it is clearly
sourced in law.

What
has to be determined firstly is whether the Council exercised a
public power when making the rules. In this regard I agree
fully
and have nothing to add to the position taken by both Yacoob J3
and O’Regan J4
that the rules are an exercise of public power.

Moving
on from this premise, both the High Court and the applicant argue
that this public power is also legislative in nature
and that this
alone constitutes a separate ground for setting the rules aside as
legislative powers may only be exercised by
Parliament. However,
as noted in the judgment of O’Regan J, legislative powers may be,
and often are delegated.5
It is clear that the mere characterisation of a power as
legislative does not automatically render it unlawful for anybody
else but the legislature to exercise it. However, as will appear
below, the nature of the power, legislative, executive or
administrative, is an important factor in determining the extent to
which a power can be delegated.6

The
real question then is not whether the power was legislative or not,
but whether it was validly delegated to the Council.
On this my
approach differs from that of Yacoob J, who proceeds on the basis
that since there was no challenge to the validity
of the Notice,
the delegation in the Notice, if any, must be taken as valid.7
For the reasons set out below, I agree with O’Regan J that the
first task must be to determine whether any delegation in the
Notice, implied or otherwise, “would be unlawful or inconsistent
with the Constitution, and if the Notice is open to an
interpretation
that does not include a delegation then that should
be the interpretation attached to the Notice.”8

It
is a fundamental tenet of our constitutional jurisprudence that all
law, whether statute, common law, customary law or regulation
mustbe read in a manner that is consistent with the Constitution.
This principle is not limited to consistency with the spirit,
purport
and objects of the Bill of Rights as required by section
39(2), it is an implied principle of the Constitution as a whole
that
a constitutional interpretation should always be preferred to
a non-constitutional interpretation. The principle has been stated
by this Court as follows:

“The purport and objects of
the Constitution find expression in s 1, which lays out the
fundamental values which the Constitution
is designed to achieve.
The Constitution requires that judicial officers read legislation,
where possible, in ways which give
effect to its fundamental values.
Consistently with this, when the constitutionality of legislation
is in issue, they are under
a duty to examine the objects and
purport of an Act and to read the provisions of the legislation, so
far as is possible, in conformity
with the Constitution.”9

These
remarks apply with equal force to the interpretation of regulations.

On
the assumption that a delegation of power to the Council is
unconstitutional, it would not suffice, in my view, to simply state
that the validity of the Notice was not challenged. The Notice
must be interpreted, if possible, in a manner that avoids such
an
unlawful delegation. Yacoob J’s answer to this approach is to
say that no other interpretation is possible and therefore
it is
unnecessary to determine if the delegation was valid as it would
make no difference.10
However, as will appear below,11
the Notice is indeed capable of an alternative interpretation that
limits the scope of the powers that the Council may exercise.
Even
if it were not, I consider it nonetheless important that the route
of constitutional interpretation should be followed
– even if it
does not lead to a different result.

Delegation

I
turn now to what, in my view, is the crux of the case and that is
the question whether there was a valid delegation of power
by the
Minister to the Council. I agree with O’Regan J’s general
approach to this question but regrettably disagree with
her
application of the principles to the facts of this case.

It
will be convenient to deal first with the question whether the
Notice contains a delegation of power to the Council and, if
so,
what the extent of that delegation is. There is no express
delegation of rule-making power to the Council in the Notice.
It
is however clear, as pointed out by my colleague,12
that the creation of a regulatory institution envisages that it
will play an important role in regulating the micro-lending
industry and in determining who qualifies for exemptions. It
follows that the creation of the Council necessarily implies that
it must be allowed to make some rules to fulfil its role as a
regulatory institution. It would not be possible for the Council
to perform the role allocated to it if it were given no rule-making
power at all.

What
lies at the very heart of this case, however, is the question
whether the role of the Council requires it to simply apply
the
rules and standards set by the Minister, or whether the Notice
envisions a Council that takes it upon itself to construct
the
conditions and extent of exemption.

It
seems to me that the Notice itself can be read either way.
Regulation 1.6 which defines a “regulatory institution” could
be read, as Yacoob J has done, as conferring a much wider
discretion to do “everything necessary to
fulfil the responsibility imposed on it.”13
It could however also be read as limiting the Council to
the application of the Minister’s Rules. It is worth reproducing
Regulation
1.6 to show how I come to the latter interpretation
which conflicts with that contended for by Yacoob J.

“1.6 “regulatory
institution” means a legal entity having a Board of Directors
which has, amongst other directors, equal and
balanced
representation between consumers and the money lending industry and
which is approved by the Minister in writing and published
in the
Government Gazette as having the capacity and the mechanisms in
place effectively to -

(a) manage
its business as a regulatory institution with competent management
and staff;

(b) register
lenders in accordance with accreditation criteria approved by the
Minister;

(c) ensure
adequate standards of training of staff members interacting with the
general public;

(d) require
adherence to and monitor and ensure compliance by lenders with this
notice;

(e) fund
itself from contributions by lenders or other sources;

(f) ensure
that complaints from the general public are responded to
objectively;

(g) deal
with appeals by lenders and borrowers in respect of any decision of
the regulatory institution or any committee, ombudsperson
or referee
instituted by it;

(h) educate
and inform the general public and lenders in relation to their
rights and obligations under this notice;

(i) annually
publish information regarding the money lending industry, the
services provided, security and/or guarantees required,
types of
charges and the average annual charges levied by each lender in a
comparable format;

(j) collect
and collate information and statistics on lenders and complaints
handled by the regulatory institution, including the
-

(i) number
of complaints lodged and details of the complainant;

(ii) number
of lenders found in breach of this notice and the reasons therefor;

(iii) names
of lenders against whom substantiated complaints have been lodged
and the number and nature of complaints;

(iv) response
time to resolve complaints;

(v) the
number of items monitored under each category;

(vi) the
number of breaches detected through monitoring;

(vii) the
number and nature of sanctions imposed; and

(viii) the
number of decisions appealed against and the outcome thereof;

(k) annually furnish the
Minister with a detailed report on lenders, its activities and
functions and any other information that
the Minister may require;

(l) review its own
effectiveness and the effectiveness of this notice and to recommend
appropriate changes to the Minister”.

The only subsections that are capable of being read as imposing a
broader duty on the Council to dictate conditions of exemption
are
(b), (d) and (j). While requiring registration clearly involves a
positive task, the proviso “in accordance with
accreditation criteria approved by the Minister” (regulation
1.6(b)) makes it clear that the regulatory institution
is to have
only an administrative role, not a creative role involving the
determination of conditions of registration. Its task
is to
register as dictated by the Minister. Regulation 1.6(d) does
require the Council to ensure that lenders comply with the
Notice;
it will accordingly need investigation and enforcement procedures
to do so. Those procedures should not, however, become
extra
conditions for exemption. They should remain administrative tools
to give effect to the Notice. Finally, many of the
rules could be
justified as necessary to perform the information-gathering task.
However, a careful look at the type of information
that must be
collected under regulation 1.6(j) leads us down a different path.
It all relates to lenders, their compliance with
the Notice, the
number of complaints and how they have been dealt with.

In addition, regulations 1.6(k) and (l) suggest
very strongly that the correct method for the Council to alter
conditions of exemption
is through recommendations and reports to
the Minister, not by including those conditions it believes
necessary in its own rules.
On this interpretation of the Notice,
the Council would need some provisions to fulfill the limited
obligations that the Notice
imposes. There is however nothing in
regulation 1.6 that suggests that in doing so, the Council must
have any power to set new
conditions for exemption. The Council
remains a central role-player in the regulation of the
micro-finance industry, but that
role does not extend to the
determination of what a lender must do to qualify for exemption.

How
should a choice be made between these interpretations? While it is
important to give effect to the purpose of the Notice,
the choice
must, if at all possible, be an interpretation that is
constitutionally compatible. That requires a determination
as to
what powers section 15A of the Usury Act14
(the Act) allowed the Minister to delegate to the Council. What
must be avoided is a reading that would necessitate the delegation
of powers if the Act would not allow that delegation. The need for
proper delegation is based on the doctrine of legality; it
is
accordingly not necessary, in my view, to determine in this case
whether the power exercised by the Council is administrative,
legislative or executive. All public power must be sourced in law.
I turn squarely now to the question of delegation.

My
starting point is the maxim “delegatus delegare non potest”
which

“is based upon the assumption
that, where the legislature has delegated powers and functions to a
subordinate authority, it intended
that authority itself to exercise
those powers and to perform those functions, and not to delegate
them to someone else, and that
the power delegated does not
therefore include the power to delegate. It is not every delegation
of delegated powers that is hit
by the maxim, but only such
delegations as are not, either expressly or by necessary
implication, authorised by the delegated powers.”15

In the
context of this case, the question is whether the power conferred on
the Minister in section 15A of the Act either expressly
or by
necessary implication authorises the sub-delegation of the delegated
power to exempt. The authorisation, I must stress,
must flow from
section 15A and not from the Notice. The power to delegate must
exist prior to and independently of the manner
in which the Minister
exercises his powers.

Section
15A reads:

“The Minister may from time
to time by notice in the Gazette exempt the categories of money
lending transactions, credit transactions
or leasing transactions
which he may deem fit, from any of or all the provisions of this Act
on such conditions and to such extent
as he may deem fit, and may at
any time in like manner revoke or amend any such exemption.”

There
is no express power for the Minister to delegate. A sub-delegation
of the Minister’s powers could only be justified if
it is
“reasonably necessary” or, to put it differently, “if effect
cannot be given to the statute as it stands unless the
provision
sought to be implied is read into the statute.”16

In
order to determine whether or not the sub-delegation by the
Minister to the Council is reasonably necessary, it is appropriate
to begin with an examination of the section itself as it appears in
the broader context of the Act. There is no textual suggestion
of
an authorisation to sub-delegate. The section refers specifically
to the Minister and his discretion – “as hemay deem
fit” – as the source of the power to exempt. I agree with the
High Court that the fact that section 15A does not
specifically
provide in clear terms for the delegation of the powers of the
Minister while, on the other hand, there are other
sections in the
Act, for example sections 12 and 12A – which provide for a
delegation of the Registrar’s powers – strengthens
the
inference that the legislature did not intend to allow further
delegation.17
To my mind, this points away from permitting any meaningful
delegation of the Minister’s more policy-driven powers.

While
I agree with O’Regan J that Ministers will of necessity have to
delegate their powers to other functionaries, this must,
in my
view, relate to a delegation to officials in the Minister’s
department, not to a Council which is a private body. It
also
relates only to powers that do not require the exercise of a
political discretion. The powers given to the Minister in
section
15A relate to the determination of policy. They are given to him
because of his position as an accountable member of
government. It
seems to me that they should, to the extent that they involve the
determination of policy, be exercised by him.
The fact that
sections 12 and 12A relate to the Registrar’s powers also seems
to indicate that his powers may be delegated,
while the more
policy-driven powers assigned to the Minister may not.

The approach above is not only consistent with the textual
interpretation of the section, it is an approach which has been
developed and regularly applied by the courts over the years. In
making this determination, a number of factors may be identified.
These include: the nature and impact of the power; the extent of
sub-delegation and continued review by the original delegator;
practical necessity; and the identity and importance of the
delegator and the delegee.18
I will consider each of these factors in turn.

From the above it would seem firstly that in general, powers that
have far-reaching impact or that involve the exercise of a
large
degree of discretion or are legislative in nature are less likely
to allow for sub-delegation than less important administrative
or
executive powers that can be mechanically applied.19
The power to exempt certain transactions from the Act or to set
the conditions for exemption is an important and far-reaching
power. It is the means of regulating the large and ever-growing
micro-lending industry and failure to adhere to the Minister’s
requirements bears the threat of criminal sanction. It is
unnecessary at this stage to decide whether the power is
legislative
in the strict sense of the word. Suffice to say that
it bears many legislative characteristics that point away from
reading
in the power to delegate. I should note that the above
comments apply both to the categorisation of loans and the setting
of
conditions. I do not see a meaningful difference between the
two: they act together to determine who is and who is not entitled
to exemption.

Secondly,
the total delegation of a power is less likely to be permitted than
its partial delegation.20
In this regard the level of control maintained by the original
functionary over the delegated power is very important – the
greater the control, the lesser the extent of the delegation.
Although in this case it is true that the Council must report
to
the Minister and that the Minister retains the discretion to remove
the Council as a regulatory institution, this is at most
indirect
control. There is no direct supervision or immediate oversight
over the Council and no ability to overrule individual
decisions.
In their submissions, both the Council and the Minister admit that
the Council can take decisions contrary to those
of the Minister.
The power of the Minister is limited to a disapproval or
cancellation of the decision after it has been made.
What should
also be kept in mind is that it would be extremely difficult for
the Minister to remove the Council as a regulatory
institution as
he would have to find or create a replacement. Compared to the
situation where the Minister delegates a power
to a lower level
functionary in his own department or even another department, the
level of control or supervision in this case
is substantially
lower.

In Shidiack v Union Government21Innes ACJ held that when “the Legislature has prescribed a
test which is to be discharged ‘to the satisfaction of the
Minister,’
… that cannot mean to the satisfaction of anybody
else.” This must however be tempered by the recognition that it
is sometimes
impossible for a functionary to exercise all his
assigned powers himself.22
In this context, both Yacoob J and O’Regan J point, quite
correctly in my view, to the practical necessity of having a
regulatory
institution to perform the complex everyday functions of
controlling the industry. In my view, however, this does not seem
to
be what is at stake in section 15A. The section concerns the
setting of broad, basic standards and rules which will be applied
to all lenders. It is not necessary to have another institution
other than the Minister to set those standards and make those
rules. A body to enforce them will be needed, but not to make
standards of its own. Indeed, after the decision of the High
Court, the Minister himself implemented the Council’s rules
through regulation. It could not be validly argued, in my view,
that the Minister was not capable of enacting the rules himself,
even if he were to do so through consultation with the Council.
To
my mind, “practical necessity” requires no more delegation than
what is necessary to enforce the Minister’s rules.
In this
context I am in agreement with the remarks of Streicher JA in his
minority judgment in Frontier Safaris23
that if the statutorily assigned body was unable to cope with its
task “the Government should have requested the Legislature
to
reconsider the matter” rather than taking it upon itself to
delegate the task to another body.

Fourthly,
the nature and importance of the delegator and that of the delegee
are also relevant.24
Before I turn directly to that matter, it is as well to note that
accountability is a central value of our Constitution.25
This means that our law must be developed and interpreted in a
manner that ensures that all bodies exercising public power are
held accountable. However, to my mind, it also means that courts
should be slow to infer the delegation of power to bodies that
cannot be held directly accountable through ordinary political
processes.

The
Minister is a very important member of government. His holds a
public position and his interests are solely those of government
and the people. He is directly accountable both to the National
Assembly and to the electorate. These considerations, together
with his knowledge and experience, seem to be the reason why
section 15A assigns this important discretion to him. On the other
hand, although the Council exercises public powers and may be
classified as an organ of state, it remains a private company.
Admittedly, as a section 21 company, the Council is not motivated
by profit. In addition, it was created and is structured
and
governed with the regulation of the money-lending industry in mind.
However, although the interests and goals of the Council
may
regularly coincide with governmental and public interests, the two
should not be equated. The Council is not elected nor
is it
directly accountable to the public. It is only accountable through
the very limited control exercised by the Minister.
These are
differences which should, in my view, not lightly be overlooked.

Finally,
it should be noted that a power that is exercised without authority
cannot be ratified after the fact.26
Therefore, if the Council exceeded its powers in any way, this
cannot be cured by the Minister’s agreement but rather by the
valid exercise of the power by the Minister himself.

Foreign
Law

Although decisions in foreign jurisdictions should never be
slavishly adopted,27
a brief examination reveals that there is much that is similar
between our law on delegation and the decisions of foreign courts.
I consider that the manner in which they have dealt with similar
issues on this aspect provides helpful guidance. In particular,
a
large number of common-law jurisdictions have adopted the
presumption against sub-delegation contained in the maximdelegatus delegare non potest, subject generally to the
exception that Ministers may freely of necessity delegate within
their
own departments.28
In England,29
Australia30
and New Zealand,31
the position is that delegation is less likely to be implied if a
power is legislative in nature or if the decision involves
the
exercise of a wide discretion.32
In Canada the Supreme Court has regularly held that an authority
cannot enact regulations that effectively turn the exercise
of a
power that was meant to be dealt with by it through regulation into
a discretionary administrative power to be exercised
by itself or
another body.33
The extent of delegation and the degree of control retained by the
delegator have also been examined.34
In Allingham and Another v Minister of Agriculture and
Fisheries35for example, a committee had the wartime power to order farmers
to grow certain crops on specific fields. With respect to one
farmer they left the decision of which field should be used to
their executive officer. The exercise of power was held to be
invalid, but the Court noted that there would have been no problem
if the committee had acted itself on the recommendation of
the
officer.36
There are also a number of Canadian and English decisions that
suggest that it is impermissible to set as an administrative
condition, compliance with the regulations of a private body.37

Conclusion

The
discussion above leads me to the conclusion that the only powers
that can constitutionally be delegated to the Council are
those
that are reasonably necessary to apply the rules set by the
Minister and to fulfil the limited role prescribed for it in
the
Notice. The Act neither contemplates nor permits the delegation by
the Minister to the Council of the policy-making function
of
determining categories or conditions of exemption. While the
administration of the Minister’s Rules will themselves make
it
more difficult to obtain exemption, there is, in my view, a
meaningful distinction to be drawn between rules that implement
the
Minister’s Rules and those that go beyond implementation and
create new hurdles for exemption. The difference may be described
as one between rules of procedure and rules of substance. The
former are valid, the latter are not.

This
conclusion means that the general attack on the Council’s power
to make any rules and the challenge to the original rules
must be
dismissed. I associate myself with O’Regan J’s comments in
this regard.38
The difference in our judgments is, to a great extent, one of
emphasis rather than essence. We both agree that the Council
can
make rules but that particular rules may exceed that authority.
The difference arises in the extent of the discretion we
believe
the Council has to determine how to fulfil its duties under the
Notice. Some of the rules which have been challenged
may be
described as setting a condition rather than implementing the
Minister’s rules. That exceeds the scope of permissible
delegation. O’Regan J on the other hand gives, in my view, too
great a latitude to the Council to fulfil its regulatory purpose.

I
should add that, in my opinion, the fact that the Council is
obliged to exercise its powers, including the limited rule-making
power it has, in accordance with the Constitution and specifically
the Bill of Rights, does not alter the position regarding
delegation. Delegation is about the existence of powers; the
manner in which those powers should be exercised should not affect
the question whether they have in fact been given to a particular
body. I turn now to consider the validity of specific rules.

Validity
of the rules

It is not the Court’s task to embark on an examination of each
rule to determine its character and validity. The Court need
only
to look at those rules which the applicant has raised as specific
points of concern. If the issue were not moot, this decision
would
also allow further challenges to specific rules in the future.

The
main challenge raised by the applicant is to the validity of the
National Loans Register which is dealt with in rule 6. There
are a
number of detailed provisions regarding the submission of
information (rule 6.1), enquiries from the register (rule 6.2),
confidentiality (rule 6.10), the obligation to supply information
to the borrower (rule 6.8) and the resolution of disputes (rule
6.7). The purpose of the Register is to protect both borrowers and
lenders by ensuring that lenders do not lend to borrowers
who
cannot pay. This is, in itself, a worthwhile goal.

The
value of the Register, however, cannot be a factor in determining
if its creation is permissible under the limited delegation
of
power allowed by section 15A. The crisp question is whether the
establishment of the Register is reasonably necessary to
give
effect to the Minister’s rules. It is not. The Register imposes
onerous and controversial reporting requirements that
go far beyond
what is required by the Minister’s Rules. The Council’s rule 6
begins with the following broad obligation:

The lender shall submit to an
information broker39
accurate data in respect of all loans granted, for purposes of such
data being captured on the national loans register in accordance
with this Rule 6.40

The
remainder of the rule compels a lender to submit information to an
information broker at the following times: on the registration
(rule 6.3), update (rule 6.4) and closure (rule 6.5) of an account
and to the borrower, if requested, if her application for
a loan is
rejected (rule 6.8).

In
contrast, the Minister’s Rules impose no duty on lenders to
provide information to anyone other than the borrower. While
there
are references to the submission of information to a credit bureau,
there is no obligation. The effect of the Council’s
Rules is
that if a lender fails to submit information their registration
with the Council may be cancelled. Registration is
a condition for
exemption. In a very real sense the submission of information
becomes an additional condition to be entitled
to exemption, a
condition only the Minister can create. The National Loans
Register may be a good idea, but the Council did
not have the power
to establish it. I therefore find that rule 6 is invalid.

This
finding makes it unnecessary to consider the other complaints which
relate to specific discrepancies between the Minister’s
Rules and
the Council’s Rules relating to rule 6. It is also unnecessary
to consider the bulk of the privacy challenge which
was directed at
rule 6. The applicant however also raised privacy concerns about
rules 3.9, 3.11 and 7.6. I am however, for
the same reasons as my
colleagues,41
of the opinion that the issue is moot and that it is not in the
interests of justice to address those challenges at this time.

The
applicant also expressed concern about a number of other rules.
First, the applicant notes that the rules require an application
for registration to be made.42
This is a necessary administrative step to give effect to the
Minister’s requirement that lenders be registered with a
regulatory
institution. It is an implementation of the Notice,
nothing more.

Rule
3.643
allows the Council to impose additional conditions for registration
on specific lenders. There is no indication what these conditions
might be. The Council is effectively making compliance with its
unlimited discretion a condition for exemption. The effect
of this
provision is to impermissibly transform a rule-making power to an
unfettered administrative discretion.44
It is true that in exercising that power, the Council would have
to act reasonably and that an aggrieved lender could challenge
a
specific exercise of the discretion. Many of the conditions that
the Board imposes may be what I would characterise as the
implementation of the Minister’s rules. However, those
observations cannot determine whether the Council may have that
discretion
in the first place. It may not. Rule 3.6 imposes a
condition for exemption and is therefore invalid.

The
applicant also complains about rules 3.1545
and 3.1646
which allow the Council to cancel or suspend a lender’s
registration, and therefore deny them exemption, for a number of
infractions. The list of infractions include breaching any of the
rules (rule 3.16.1), acting in a manner which is likely to bring
the Council into disrepute (rule 3.16.3), failing to comply with
any instruction of the Council (rule 3.16.10), failing to provide
the Council with documents within 20 days of request (rule 3.16.8),
failing to pay an amount owing to the Council (rule 3.16.7)
and on
any other reasonable ground (rule 3.16.15). Although cancellation
or suspension of registration will probably be reserved
for the
more serious infractions, there is no mechanism in the rules to
prevent cancellation for even the most minor infraction
or
difference of opinion with the Council. This clause vastly extends
the conditions of exemption which, as I have noted, is
the sole
terrain of the Minister. Although there must be some form of
sanction for non-compliance with the rules for them to
have any
meaning at all, rules 3.15 and 3.16 go far beyond what is necessary
and permissible. I do not think it is appropriate
to separate the
good from the bad, it seems preferable to declare the whole of
rules 3.15 and 3.16 invalid.

The
Council is entitled to amend the rules without the consent of its
members.47
While this may be an onerous provision, there is nothing in it
that offends against the limitation on the Council’s power
that I
have described above. The power to amend does not in itself set
conditions of exemption. The exercise of the power might
result

in
unacceptable rules, but that does not make the power to amend
invalid. I should explain why this provision is distinguishable
from rules 3.6, 3.15 and 3.16. Those rules in themselves create
new conditions for exemption. Rule 3.23 is not itself a condition,
but a method through which new conditions will be made.

In
consequence I would make the following order:

Leave to appeal is granted.

Rules 3.6, 3.15, 3.16 and 6 are invalid and of no force and
effect.

The respondent is to pay the costs in this court and the Supreme
Court of Appeal.

O’REGAN
J:

I
have had the opportunity of reading the judgment prepared in this
matter by my colleague Yacoob J. Although there is much in
his
judgment with which I agree, I have a somewhat different approach
to the case which will appear from what follows. Since
preparing
this judgment, the Chief Justice has also prepared a judgment. The
differences between my judgment and his appear clearly
from his
judgment.

In
my view, there are two key issues to be considered: the first is
whether the second respondent, the Micro Finance Regulatory
Council
(the Council), had the competence to make the revised rules for
regulating the micro-finance industry that it made on
11 July 2002
(the 2002 rules). If it is concluded that the Council did have
that competence, the second question that arises
is what
constitutional obligations, if any, the Council bore when making
the 2002 rules, and whether it complied with those obligations.
This approach differs from that set out in both paragraphs 348
and 2549
of the judgment of Yacoob J.

Did
the Council have the competence to enact the rules?

The
applicant asserts that the Council did not have the competence to
make the rules on the following grounds: (a) they argue
that the
rules are legislative in character and therefore, in making them,
the Council unconstitutionally usurped legislative
power conferred
upon the legislative arm of government in our constitutional order;
(b) that the rules are inconsistent with
the Exemption Notice
issued by the Minister because that notice, constitutionally
construed, did not delegate (and could not
have delegated) to the
Council the power to make the rules; and (c) that even if the
Council did have the power to make rules,
in making the revised
rules it unlawfully usurped the Minister’s power to determine
conditions of exemption under section 15A
of the Usury Act 73 of
1968 (the Act) and extended beyond the delegation that permitted it
to make rules. The first two of these
arguments challenge both the
original rules made by the Council and the revised rules it made in
July 2002, while the last relates
only to the revised rules. Each
of the arguments will be dealt with in turn.

Facts

It
will be useful briefly to set out the facts again. Section 15A of
the Usury Act provides that:

“The Minister may from time
to time by notice in the Gazette exempt the categories of money
lending transactions, credit transactions
or leasing transactions
which he may deem fit, from any of or all the provisions of this Act
on such conditions and to such extent
as he may deem fit, and may at
any time in like manner revoke or amend any such exemption.”50

The
provision clearly gives the Minister wide powers to determine the
conditions for the exemption of certain loan transactions.
In 1992,
the first exemption notice was issued.51
This notice exempted small loans (up to R 6 000) from the interest
rate limits stipulated in the Act in certain circumstances.

The exponential growth in the small loans sector led to a process
of investigation as to the manner in which the industry should
be
regulated. This resulted in the repeal of the earlier notice and
its replacement, on 1 June 1999, by Government Notice 713
(the
Exemption Notice or Notice).52
This Notice exempted certain moneylending transactions from most
of the provisions of the Act provided that the lenders register
with a regulatory institution and comply with the terms of the
Exemption Notice.53
At the time that section 15A was inserted into the Act, there was
no definition of “regulatory institution.” A definition
was
added in 2003.54
The Notice furthermore identified those moneylending transactions
which were eligible for exemption as those that did not exceed
R10
000 and which provided for repayment within 36 months.55
The Exemption Notice also contained appended rules which set out
the basis on which loan transactions subject to exemption were
to
take place between borrowers and lenders.

On 16 July 1999, the Minister announced that the Council had been
approved as a regulatory institution for the purposes of the
Exemption Notice.56
The Council had been incorporated as a section 21 company (not for
profit) by a group of institutions including the Association
of
Micro Lenders, the Banking Council of South Africa, the Consumer
Institute of South Africa, the Legal Resources Centre, the
Department of Trade and Industry and the South African Reserve Bank
on 16 September 1998. It had applied for approval as a regulatory
institution on 31 May 1999. As part of that process it had
presented a business plan, its memorandum and articles of
association,
the registration criteria it intended to apply and the
draft rules that would govern its regulatory processes. Those
draft rules
were then adopted on 24 June 1999 by its board of
directors and are referred to in this judgment as “the original
rules”.
The Council is the only regulatory institution that has
been approved as a regulatory institution in terms of the Exemption
Notice.

The
applicant registered with the Council once it had been approved as
a regulatory institution. During June 2001, the Council
decided to
introduce a revised set of rules. Central to the revised rules was
the establishment of a National Loans Register.
Under the new
rules, lenders are to check the National Loans Register before
entering into a money-lending transaction with
a borrower.
According to the Council, the purpose of this procedure is to
reduce the number of borrowers who become over-extended
by taking
loans from a variety of micro-lenders. The Register should
therefore protect the interests of both borrowers and lenders.

The applicant objected to the revised rules, including the
establishment of the Register. Despite these objections, the
Council
adopted the rules with effect from 1 July 2002. The next
day, the applicant wrote to the Council arguing that the rules
breached
constitutional rights, including the right to privacy and
the right to administrative justice, and stated that the adoption
of
the revised rules was beyond the powers of the Council. When
the Council failed to respond to its letter, the applicant
approached
the High Court for relief. The story of the litigation
thus far has been set out in the judgment of Yacoob J and I shall
not
repeat it here.

One
further thing needs to be said at the outset. On 8 August 2005,
just before the matter was to be heard in the Supreme Court
of
Appeal, the Minister repealed the Exemption Notice and issued a new
one. The new notice included all the revised rules adopted
by the
Council.57
The Council argued before the Supreme Court of Appeal that the
matter was accordingly moot but the Court rejected that argument
on
the basis that the Council may still make further rules in future.
This possibility has been removed by the enactment of
the National
Credit Act which has just come into force.58
However, given the different approaches taken to this question in
the Supreme Court of Appeal and the High Court, and the
constitutional importance of these issues, I agree with Yacoob J
that it is in the interests of justice, even if the matter is
now
moot, for us to deal with the substantive issues raised upon the
appeal. As the main reason for deciding the matter, despite
its
being moot, is to resolve the difference of opinion that arose
between the High Court and the Supreme Court of Appeal, it
is not
appropriate or necessary, in my view, to consider in detail all the
challenges to the individual rules raised by the applicant.
These
challenges were considered neither by the High Court nor the
Supreme Court of Appeal, and as the rules are no longer in
force,
no benefit would be obtained from a thorough consideration of the
applicant’s arguments in this regard.

(a)
Do the rules constitute an unconstitutional usurpation of
legislative power?

The applicant attacked both the original rules and the revised
rules. The first ground of challenge which is directed at both
sets of rules relates to the argument that the rules constitute an
unconstitutional usurpation of legislative power. It is this
argument that was upheld by the Pretoria High Court in respect of
both sets of rules. That Court held that the making of both
sets
of rules constituted an unconstitutional exercise of public
legislative power contrary to the rule of law. The High Court
referred to section 43 of the Constitution which provides that the
legislative authority in the national sphere of government
vests in
Parliament, in the provincial sphere in provincial legislatures and
in the local sphere in municipal councils.59
Du Plessis J reasoned further that although the power may be
delegated, that delegation must be traced back to the
Constitution.60

The
High Court then analysed the rules and found that the rules are
coercive in character in that no person may conduct a micro-lending
business without registering with the Council and complying with
its rules. It concluded, therefore, that the rules did constitute
rules of general application, rather than private rules binding as
a result of a contractual relationship between parties. It
also
dismissed an argument by the Council that it had delegated
authority to make the rules on the basis of the principle
“delegatus
delegare non potest” (a person who is delegated a
power to do something may not delegate it further).61

The Supreme Court of Appeal, in its turn, disagreed with Du Plessis
J that the rules of the Council constituted rules of general
application. It held that the premise upon which the High Court
had proceeded, that the company is performing a public regulatory
function and making rules of general application relevant to that
function, was misconceived. On the contrary, it held that
the
company is “a private regulator of lenders who choose to submit
to its authority by agreement”.62
The company does not purport, it held, to be exercising
legislative powers. Based on this premise, the Supreme Court of
Appeal
reached a different conclusion to that of the High Court.

In my view, the High Court’s premise is correct. As Du Plessis J
noted in his judgment, in analysing the character of the
rules and
the Council, one should not focus merely on the fact that it is a
private company.63
The question that needs to be answered is whether the rules are
relevant to the performance of a public function or are merely
a
form of private ordering. It is true that no bright line can be
drawn between “public” functions and private ordering.
Courts
in South Africa64
and England65
have long recognised that non-governmental agencies may be tasked
with a regulatory function which is public in character.66
In determining whether rules are public in character, although
made and implemented by a non-governmental agency, several criteria
are relevant: whether the rules apply generally to the public or a
section of the public; whether they are coercive in character
and
effect; and whether they are related to a clear legislative
framework and purpose. This list is not exhaustive, nor are
any of
the criteria listed necessarily determinative.

I
now turn to apply these considerations to the facts of this case.
It is clear that the overall purpose of both sets of rules
made by
the Council must be viewed in the context of section 15A of the Act
and the terms of the Exemption Notice. Section 15A
confers a power
on the Minister to provide for a scheme of exemption from the
ordinary terms of the Act. The Exemption Notice
provides that the
scheme will employ one or more regulatory institutions to further
that purpose. The Council is such a regulatory
institution and its
function is to regulate the micro-lending industry. No one may
make small loans of the kind that fall within
the terms of the
Exemption Notice unless registered with the Council and compliant
with both its rules and the rules set out
in the Exemption Notice.

In my view, the Supreme Court of Appeal overlooked this clear
legislative framework when it concluded that the Council was merely
regulating matters privately. In my view, therefore, it is clear
that both the purpose and effect of the rules of the Council,
understood in the light of the Council’s status as an approved
regulatory institution in terms of the Exemption Notice, were
to
regulate the micro-lending industry and all those borrowers and
lenders in that industry. No lender may lawfully operate
without
registering with the Council; once a lender has registered, it is
bound by the terms of the Exemption Notice and the
rules of the
Council. In that sense, the rules are coercive and general in
their effect. I cannot therefore agree with the
conclusion of the
Supreme Court of Appeal that, properly construed, the Rules are
private in character.

On
the other hand, the fact that the rules are public in character
does not automatically mean that they constitute an unlawful
usurpation of legislative power. The power to delegate subordinate
legislative authority in a modern state is an important power.
No
modern state could hope to regulate all its affairs through
legislation passed in the national, provincial and local spheres
of
government.67

Courts
should therefore be cautious to avoid adopting unduly restrictive
rules in this area which will limit the possibility of
effective
ordering of our society by organisations which may not form part of
government. In so doing, a court should bear in
mind that where an
institution may constitute an “organ of state” as defined in
the Constitution, it will be bound by the
terms of the Bill of
Rights and may not unjustifiably limit individual rights. I now
turn to the question of whether there was
a valid delegation in
this case.

(b)
Was there a valid delegation of power in this case?

As I have already mentioned, the High Court held that there had not
been a valid delegation of power in this case. Section 15A
of the
Act provided that the Minister “may from time to time . . .
exempt the categories of money lending transactions . .
. which he
may deem fit, from any of or all the provisions of this Act on such
conditions and to such extent as he may deem
fit”. This is a
broad power. Its breadth must also be understood in terms of its
subject matter. Section 15A permits the
Minister to exempt certain
types of money-lending transactions from the rules of the Act in
circumstances which “he may deem
fit”. Moreover, his ability
to impose conditions and regulate that exemption is also clear.
The section provides that the
Minister may exempt certain
transactions “on such conditions and to such extent as he may
deem fit”. This provision clearly
indicates that the Minister
may regulate those transactions on different conditions and to the
extent he deems appropriate.
In my view, the broad language of
section 15A clearly confers a regulatory power on the Minister
which is the power he used when
he issued the Exemption Notice.
The power also permits the Minister to delegate the daily
regulation of the exempted loans to
an official or institution. It
would be quite inappropriate for the Minister to be held personally
responsible for the administration
of the exemption system.

The
next question that arises is whether the terms of the Exemption
Notice delegate a similar regulatory power to the Council,
and if
so, whether they do so lawfully. It is correct, as Yacoob J points
out in his judgment, that the applicant did not challenge
the
lawfulness of the Exemption Notice. It is also correct that the
Notice contains no express delegation of power. Counsel
for the
applicant argued that the terms of the Exemption Notice must be
interpreted in the light of the provisions of the Constitution.
Counsel further argued that a constitutionally appropriate
interpretation would find that the Notice had not delegated the
power to issue rules to regulate the industry upon the Council.

The principle of delegatus delegare non potest, in terms of which a
person performing a delegated function may not himself or
herself
delegate the performance of that function to another person or
institution, is often referred to in judgments of South
African
courts.68
Equally established, however, is the principle that it admits of
many exceptions. The question in this case is whether, properly
construed, the Notice does lawfully delegate powers to the Council.
Applicant’s counsel must be correct in asserting that
if an
implied delegation would be unlawful or inconsistent with the
Constitution, and if the Notice is open to an interpretation
that
does not include a delegation then that should be the
interpretation attached to the Notice.

Criteria
relevant to determining whether a delegation of a delegated power
is acceptable include the following: the character
of the original
delegation; the extent of the delegation of the delegated power;
the extent to which the original delegee continues
to review the
exercise of the delegated power;69
considerations of practicality and effectiveness; and the identity
of the institutions or persons by whom and to whom power is
delegated.70
To consider whether the applicant’s argument has merit, it is
necessary to look again at the terms of the Exemption Notice.
In
particular, it is important to consider the definition of
regulatory institution contained in item 1.6 of the Notice:

“1.6 ‘regulatory
institution’ means a legal entity having a Board of Directors
which has, amongst other directors, equal and
balanced
representation between consumers and the money lending industry and
which is approved by the Minister in writing and published
in the
Government Gazette as having the capacity and the mechanisms in
place effectively to -

(a) manage
its business as a regulatory institution with competent management
and staff;

(b) register
lenders in accordance with accreditation criteria approved by the
Minister;

(c) ensure
adequate standards of training of staff members interacting with the
general public;

(d) require
adherence to and monitor and ensure compliance by lenders with this
notice;

(e) fund
itself from contributions by lenders or other sources;

(f) ensure
that complaints from the general public are responded to
objectively;

(g) deal
with appeals by lenders and borrowers in respect of any decision of
the regulatory institution or any committee, ombudsperson
or referee
instituted by it;

(h) educate
and inform the general public and lenders in relation to their
rights and obligations under this notice;

(i) annually
publish information regarding the money lending industry, the
services provided, security and/or guarantees required,
types of
charges and the average annual charges levied by each lender in a
comparable format;

(j) collect
and collate information and statistics on lenders and complaints
handled by the regulatory institution, including the
-

(i) number
of complaints lodged and details of the complainant;

(ii) number
of lenders found in breach of this notice and the reasons therefor;

(iii) names
of lenders against whom substantiated complaints have been lodged
and the number and nature of complaints;

(iv) response
time to resolve complaints;

(v) the
number of items monitored under each category;

(vi) the
number of breaches detected through monitoring;

(vii) the
number and nature of sanctions imposed; and

(viii) the
number of decisions appealed against and the outcome thereof;

(k) annually furnish the
Minister with a detailed report on lenders, its activities and
functions and any other information that
the Minister may require;

(l) review its own
effectiveness and the effectiveness of this notice and to recommend
appropriate changes to the Minister”.

This
definition makes plain that the functions expected of a regulatory
institution are extensive. It must “manage its business
as a
regulatory institution” (regulation 1.6(a)); register lenders in
accordance with the Minister’s accreditation criteria
(regulation
1.6(b)); require lenders to adhere to and monitor compliance with
the terms of the Notice (regulation 1.6(d)); deal
with appeals
(regulation 1.6(g)); educate the general public in relation to
their rights and obligations under the Notice (regulation
1.6(h));
collate information and statistics on its functioning (regulation
1.6(j)); and review its own effectiveness and the
effectiveness of
the Notice (regulation 1.6(l)).

The
scope of these powers makes it clear that the purpose is not only
to regulate the industry presently but to continue to analyse
and
provide information concerning how the industry should be regulated
in future. This aspect of the work of the Council is
not
surprising. The regulation of micro-lending in South Africa is
relatively new. It is a difficult area, in that there is
a need on
the one hand to protect the rights and interests of borrowers, and
prevent coercive and unsavoury practices by lenders,
while on the
other ensuring that decent and fair lenders are able to operate.
In the circumstances, ongoing research and review
of the manner of
regulation seems both sensible and desirable.

Another
important aspect of the Notice is that the regulatory institution
must report to the Minister regularly (regulation 1.6(k))
and the
Minister retains the right to withdraw his or her approval of the
regulatory institution should it fail to perform its
functions
properly.71
The Minister therefore retains the right of active oversight over
the affairs of regulatory institutions and may withdraw their
authority to act if they do not perform adequately.

A
reading of the Notice, in the broad context within which it was
enacted, suggests that it conferred the power to make rules
to
control the process of regulation upon the Council. It is true
that the Notice itself contains certain rules which govern
this
process but they are by no means exhaustive or complete. They do
not set out the processes for the registration of lenders,
for
example, or for the cancellation of registration of lenders
(matters both dealt with in the rules of the Council). It seems
clear that, to the extent that the Council must register lenders,
rules governing the process of registration and cancellation
or
termination of registration will need to be adopted. In my view,
therefore, the Notice, properly construed, must permit the
regulatory institutions to issue rules in relation to the
performance of its functions.

Once
it is clear, however, that the nature of the regulatory institution
requires it to make rules and that the Minister was permitted
to
delegate the regulatory power in terms of section 15A, it seems to
me that the Notice should be read to facilitate the work
of the
Council to perform its duties effectively as a regulator. There
are no reasons of constitutional principle which would
require the
Notice to be given a restrictive reading. The Council will be
required to comply with the Bill of Rights in its
actions; it is
overlooked by the Minister and it is bound by the exemption
criteria set by the Minister. The purpose of the
Notice is quite
clearly to ensure that micro-lenders are regulated comprehensively
by the approved regulatory institutions.
To permit the practical
and efficacious achievement of this purpose, the Notice should be
interpreted to permit the Council to
make such rules as are
necessary and appropriate to the performance of its function as
contemplated by the Notice. Such an interpretation
of the Notice,
it seems to me, is consistent with the overall purpose of the
Notice and should be adopted as long as it is not
inconsistent with
the Constitution. I leave over the challenges to specific rules
until later.

One
last issue needs to be considered in this regard. The High Court
placed much reliance on section 12 of the Act which provides
that
the Registrar may delegate and assign his or her duties,72
but is silent on the question of whether the Minister may do so.
Citing Chairman, Board on Tariffs and Trade and Others v Teltron
(Pty) Ltd,73
the High Court reasoned that the fact that the legislation provides
for delegation in relation to the powers of the Registrar
under the
Act, but does not do so in relation to the powers conferred on the
Minister by section 15A, is a strong indication
that the
legislature did not intend the section 15A power to be delegated.

In
the Teltron case, the court was concerned with the power to
grant exemptions in respect of surcharges imposed on the
importation of goods.
In that case, a special system to permit an
exemption was conferred by legislation upon the Director-General of
Trade and Industry
acting on the recommendation of the Board of
Trade and Industry. The facts were that the recommendation to
refuse the exemption
had not been made by the Board at all, but by
a small committee and there was no evidence of any formal
delegation of authority
to that committee by the Board. There was
a provision in the relevant legislation which permitted the Board
to delegate other
powers to the committee, but no provision
authorising the Board to delegate its powers of recommendation in
relation to the grant
of exemptions to the committee. The
Appellate Division held that the failure to grant express authority
to permit the power
to make recommendations on exemptions to be
delegated, together with the fact that, properly construed, the
exemption provision
indicated that the legislature considered the
Board to be the proper institution to recommend to the
Director-General whether
an exemption should be granted or not, led
to the conclusion that the apparent delegation to the committee in
this case was unlawful.

The
facts of this case are of course different. First, in this case,
there is no provision regulating the question of whether
the
Minister may or may not delegate his powers under the statute. In
assessing this, one must bear in mind that inevitably
a Minister in
the national Cabinet is a busy person who cannot be involved in the
daily grant of exemptions. The office of Minister
is quite
different to an institution such as a Board of Trade and Tariffs
set up specifically to monitor the implementation of
legislation
and the carrying out of administrative tasks. A power conferred
upon a Minister to provide widely for exemptions
must ordinarily be
construed to permit the Minister to delegate any administrative
functions in relation to those exemptions
to an appropriate person
or institution. It would be impractical to expect a Minister to
carry out those tasks himself or herself.
The fact that the Act
does not expressly authorise the delegation of powers conferred
upon the Minister, while it does in respect
of powers conferred
upon the Registrar, does not seem to me to support a conclusion
that the Minister may not delegate those
powers, and particularly
the administrative implementation necessary for the powers to be
fully exercised. Indeed, the converse
would seem to me more
likely. I cannot accept therefore that the Teltron case is
weighty authority for the proposition that the Notice should be
read in a manner which prohibits delegation of rule-making
powers
to the Council. Its facts are different and the functionary it is
concerned with is different.

The
next question to consider then is whether it would be unlawful or
unconstitutional for the Minister to have delegated such
rule-making powers to the Council in terms of the Notice. In
answering this question, it is important to bear in mind that the
purpose of the Notice was to provide for regulatory institutions
which would regulate the sector of the money-lending industry
making loans specified in the Exemption Notice.74
Such regulatory institutions must have significant capacity and
“mechanisms in place” to be able to perform their mandate
effectively in terms of the Exemption Notice. The very function
which the regulatory institution has to carry out requires it
to be
able to make rules on a daily basis regulating its tasks.
Moreover, given the public character of those tasks, it is
desirable, if not necessary, for those rules to be properly made
and publicly accessible so that money-lenders and borrowers can
gain access to their terms. Again, as with all rules, it would be
practical and necessary to review their effectiveness on an
ongoing
basis and where necessary amend or vary the rules to ensure that
they enabled the Council to perform its tasks fairly
and
efficiently. Finally, the Minister must be informed of the
activities of the regulatory institutions regularly and fully,
as
he has the power to terminate their mandate should they not perform
their duties properly. In all these circumstances, it
seems to me
that it is not unlawful or inconsistent with the Constitution for
the rules to be interpreted to delegate a rule-making
authority
upon the Council. Clearly those rules must be consistent with the
Notice and the overall purpose of the Act, though
there may be
challenges to individual rules, as going beyond the scope of the
delegation to be implied in the Notice, a matter
to which I shall
return shortly.

It
follows from this conclusion that the applicant’s general attack
on the rules on the grounds that the Notice must be interpreted
to
prevent the Minister from lawfully delegating the rule-making power
to the Council, must be rejected, as must the applicant’s
argument that the Council had no power to amend or revise its
rules. If the Notice properly construed delegates a rule-making
authority to the Council, that must include, as a matter of common
sense and practicality, a power to amend those rules.

It also follows from the conclusion that the Notice did permit a
delegation of rule-making power to the Council, that the attack
on
the original rules must be dismissed entirely. It is clear that
section 15A of the Usury Act grants wide powers to the Minister
to
regulate the micro-lending industry. There is no attack by the
applicant on the terms of the Exemption Notice. That Notice
makes
it clear that the Minister may approve regulatory institutions to
regulate the industry. That Notice does, by necessary
implication,
delegate a rule-making authority upon regulatory institutions
approved by the Minister. The Minister approved the
Council as
such a regulatory institution. At the time that the Minister
recognised the Council, it had a set of draft rules
which had been
disclosed to the Minister, these rules were subsequently approved
by the Council. There can be no doubt then
that the rules
established by the Council received the imprimatur of the Minister
as the rules which were to regulate the industry,
and similarly,
the Council received the same approval. The challenge to the
original rules therefore cannot be sustained.

The
next issues that arise, accepting that the Minister has delegated
rule-making authority to the Council, are the applicant’s
challenges to specific provisions of the revised rules on the
ground that those provisions go beyond the powers of the Council.

Do
the rules unlawfully usurp the Minister’s power to determine
conditions of exemption under section 15A of the Act or otherwise
extend beyond the scope of the delegation to make rules?

Section 15A of the Act provides that the Minister may exempt
categories of moneylending transactions from any or all of the
provisions of the Act on conditions and to the extent he deems fit.
The Exemption Notice identifies the categories of money-lending
transactions that are exempted. They are loans of less than R10
000, payable within 36 months, but not credit card loans and
other
bank loans.75
Nothing in the revised rules affects the Exemption Notice’s
definition of the category of loans regulated by the Council.
There can be no doubt therefore that it is the Minister and the
Minister alone who has determined the scope of the micro-lending
industry. This conclusion is an important one for it seems to me
that this is a power that is conferred upon the person of the
Minister alone. It would be inconsistent with the overall
legislative purpose of the Act to conclude that the Minister could
delegate this power of categorisation to anyone else. It is a
definitional power upon which all subsequent regulation is based
and one which a Minister, constitutionally tasked with the
formulation of policy,76
is peculiarly suited to exercise.

The
Notice then provides that such loans will be exempted from the
provisions of the Act if the lender is registered with a regulatory
institution and the lender complies with the terms of the Notice.77
The applicant’s challenge is based on the proposition that the
effect of the revised rules is to impose conditions on
money-lending
transactions in addition to these conditions. It is
unavoidable that the rules of the institution will regulate
registration
(and the process of obtaining it), as well as the
conditions and terms upon which registration will be continued.
Such rules
do not vary the class of moneylending transactions that
are exempted from the provisions of the Act, as the applicant
argued.
They regulate, as the Exemption Notice contemplates, the
process of registration. In this regard, the applicants complaints
directed at the rules regulating the registration process (rule
3.1, rule 3.6, rule 3.7, rule 3.15 and rule 31.16) must fail.

The
applicant also complains that the rules bind borrowers and others
involved in the micro-lending industry as well as lenders
on the
basis that it is beyond the powers conferred upon the Council. In
particular, the applicant points to rules 6.8, 7.7 and
7.8. This
complaint is misconceived. Regulating the micro-lending industry
will inevitably affect borrowers and others in the
industry: that
is the nature of regulation. There is nothing impermissible in so
doing. In this regard, the applicant seems
to be misconceiving the
relationship between lenders and the Council as contractual, rather
than regulatory, and its complaint
must accordingly be rejected.
For similar reasons, the complaint that the Council may vary its
rules in terms of rule 3.23 without
the consent of lenders must be
rejected as based on the same misconception that the relationship
between the Council and the
lenders is contractual. In truth, that
relationship is regulatory.

In my view, the applicant’s general complaint that the rules of
the regulatory institution may not impose any obligation upon
lenders other than those expressly provided for in the Exemption
Notice, must be rejected. Once it has been accepted, as it
has
been above, that the Exemption Notice, properly interpreted,
necessarily and lawfully delegated a rule-making power to the
regulatory institution, the requirement that lenders must comply
with those rules must follow inevitably. The Notice requires
lenders to register with a regulatory institution; the obvious
corollary must be that they must comply with the rules of that
institution. In this regard, the general complaint of the
applicant fails.

The
applicant, however, raises a further specific complaint. This
complaint relates to the provisions of the revised rules which
establish a National Loans Register to which lenders must send
information and which they are obliged to consult prior to making
loans available to would-be borrowers.

Now it may well be that as a matter of governance and public
administration, the establishment of a scheme such as a National
Loans Register should preferably be dealt with in regulations
enacted by the Minister directly in terms of section 15A, but that
is not the question which concerns us. The question is rather
whether the Council, when it provided for a National Loans Register
in its rules, went beyond the scope of the powers impliedly
conferred upon it by the Notice.

Although
I have no doubt that there are limits to the regulatory powers of
the Council under the Notice, I am not persuaded that
the
establishment of a National Loans Register, in the manner provided
for in the revised rules, exceeds those limits. The obligations
imposed upon lenders are merely to furnish information about loans
to the Register and to consult it prior to making loans.
The
purpose of this is to prevent borrowers from becoming
over-extended. There can be no doubt that this is a regulatory
purpose
directly related to the regulation of the micro-lending
industry. The task of the Council as conceived in the Notice is to
regulate
that industry properly and effectively. Clearly it is
this very function which the Council seeks to pursue by
establishing the
Register. In doing so, it neither impermissibly
redefines those loans which are subject to exemption nor does it
impose conditions
beyond regulatory conditions that fall outside of
its approved mandate.

In
its challenge to rule 6 which establishes the National Loans
Register, the applicant relies upon 3 perceived conflicts between
the provisions of rule 6 and the rules promulgated by the Minister
in annexure A to the Exemption Notice. To the extent that
there
are conflicts, it may be that the individual rules are invalid.
That was not the main thrust of the applicant’s argument,
however. It relied upon the purported conflicts to suggest that
the Council exceeded its powers in establishing a National Loans
Register. In my view, this argument could only succeed if the
Exemption Notice construed as a whole did not permit the
establishment
of a register. I have already concluded that this is
not the case and the applicant’s arguments in this regard cannot
therefore
be upheld. The question of whether there is an
unavoidable conflict between the Minister’s rules and the
Council’s rules
need not be resolved given the fact that the
rules are no longer in operation. In reaching these conclusions on
the National
Loans Register, I have not considered whether the
rules regulating the Register infringed the Bill of Rights. I turn
to that
issue now.

The
right to privacy

The
next argument to be considered is whether the Council is bound by
the provisions of the Bill of Rights and, if it is, whether
the
provisions of its revised rules infringe the Bill of Rights.

In
order to consider whether the Council is bound by the provisions of
the Bill of Rights, it is necessary to consider whether
it is an
“organ of state”. Section 8(1) of the Constitution provides
that:

“The Bill of Rights applies
to all law, and binds the legislature, the executive, the judiciary
and all organs of state.”

Section
239 of the Constitution defines an “organ of state” as:

“(a) any department of state
or administration in the national, provincial or local sphere of
government; or

(b) any other functionary or
institution–

(i) exercising a power or
performing a function in terms of the Constitution or a provincial
constitution; or

(ii) exercising a public power
or performing a public function in terms of any legislation.”

I
have found at paragraphs 119 - 121 above, that in performing the
duties of a “regulatory institution” in terms of the Exemption
Notice, the Council performs a public function. The next question
that arises is whether the Exemption Notice constitutes
“legislation” for the purposes of the definition of “organ of
state”. The definitions contained in section 239 of “national
legislation” and “provincial legislation” include subordinate
legislation.78
Whether the Exemption Notice constitutes legislation as referred
to in the definition in section 239, must be determined by
the
purpose and effect of the Notice itself. It contains rules of
general application which regulate the affairs of those to
whom it
applies. In that sense it is “legislative” in character and
falls within the meaning of “legislation” in the
definition of
“organ of state”. I am fortified in this conclusion by the
fact that there seems to be no constitutional reason
to interpret
“legislation” in the definition of “organ of state”
narrowly. Its purpose is plain. Those who are performing
public
functions in terms of legislation must comply with the Bill of
Rights. Indeed the provisions of the Bill of Rights also
bind
private persons and institutions where “applicable”,79
so there is no basis in that regard to attribute a narrow meaning
to the definition of “organ of state”. In the circumstances,
I
conclude that to the extent that the Council performs a public
function in terms of the Exemption Notice, it is an “organ
of
state” and is bound by the provisions of the Bill of Rights.

Yacoob
J has described some of the jurisprudence from other democratic
jurisdictions on issues related to the question of whether
the
Council is bound by the terms of the Bill of Rights. Like him, I
am sure that the experience of other democracies, and particularly
the difficulties encountered there in providing predictable and
principled rules to identify those who are bound by the provisions
of a Bill of Rights, informed the drafting of our Constitution and
resulted in the definition of “organ of state”.

From
what I have said, it emerges that where a body or person that does
not constitute a department of state or administration
in the
national, provincial or local sphere of government but nevertheless
performs public functions in terms of legislation,
it will be bound
by the provisions of the Bill of Rights in relation to the
performance of those tasks. The Council is such
a body.

As to whether the revised rules infringe provisions of the Bill of
Rights, Yacoob J has decided that this is an issue which is
moot in
this case. The reason for his decision is that the National Credit
Act which has just come into force regulates the
micro-lending
industry in a somewhat different fashion to the revised rules. I
agree with him that the matter is moot in that
sense. The
applicant could point to no live dispute between the parties, a
determination of which would require us to consider
whether the
revised rules are consistent with the Constitution or not. In the
circumstances, it is now necessary to consider
whether it is
nonetheless in the interests of justice for us to decide that
question or not.

I am of the view that it is not in the interests of justice for us
to do so. Paramount to that conclusion is the fact that this
is a
matter which has not been considered at all by any court other than
this one.80
The questions it raises are weighty and complex and not suited to
determination by this Court without the benefit of consideration
by
others. In the circumstances, I agree with Yacoob J that we should
not consider it now.

For
these reasons, I concur, therefore, with Yacoob J in dismissing the
appeal against the decision of the Supreme Court of Appeal.

(Ngcobo
J concurs in the judgment of O’Regan J)

For the
applicant: GJ Marcus SC and AC Dodson instructed
by Woolgar Attorneys.

2
By virtue of an exemption granted in terms of section 15A of the
Usury Act which is discussed more fully later in this judgment.

3
Although the Council has ceased to exist under the new legislative
scheme described in para 58-59, its composition and powers are
described in the present tense in this judgment because the Council
existed at the date of argument in this Court.

4
The Rules were attacked on the basis that the Council offended the
rule of law and the principle of legality in making them and
that
the Rules themselves infringed the privacy right contained in the
Constitution.

21
By section 8 of Act 100 of 1988. It is somewhat different from the
section as it now reads, but the differences are not material
for
present purposes. The present section 15A was introduced by section
6 of Act 91 of 1989.

22
This case is not concerned with credit transactions or leasing
transactions and nothing in this judgment must be understood as
saying anything about these.

23
Government Gazette 14498 GN 3451, 31 December 1992 (the first
Exemption Notice).

82
It must, however, be borne in mind that the requirement of legality
may be more complex in relation to judicial decisions and executive
action both of which undoubtedly represent the exercise of public
power. It is not the purpose of this judgment to investigate
these
difficult issues.

104
Per Scalia J, Lebron above n 97 at 378. The minority
judgment of O’Connor J dealt with the case on the basis that the
question whether Amtrak is
a government entity was not before the
court and that the issue to be considered (on the footing that
Amtrak was not a government
entity) was whether its action is
nevertheless “attributable to the Government”. Id at 400 and
408. In the view of the minority,
the Constitution is not
applicable to private action that is “fundamentally a matter of
private choice and not state action”.
Id at 409 (footnotes
omitted).

“The
lender shall allow the Council and its inspectors or other servants
and agents to inspect the business of the lender. Inspections
may
be performed by the Council at any reasonable time with or without
notice and the lender shall provide all reasonable assistance
and
facilities necessary for such inspections and shall allow the
Council access to all relevant documentation and records as may
be
required by the Council, to make copies of all such documentation or
to remove such documents for purposes of an investigation.
The
Council shall provide the lender with a receipt of all documentation
removed.”

129
See Matatiele Municipality and Others v President of Republic of
South Africa and Others[2006] ZACC 2; 2006 (5) BCLR 622 (CC) at para 50 and
the authorities therein cited in footnote 28.

18Minister of Trade and Industry and Others v
Nieuwoudt and Another 1985 (2) SA 1
(C) at 13 citing with approval Baxter Administrative
Law (Juta, Lansdowne 1984) at 435.
See also Hoexter and Lyster Volume II:
Administrative Law in Currie (ed) The
New Constitutional and Administrative Law (Juta,
Lansdowne 2002) at 134-6.

22
See Nieuwoudt above n 18 at 14-5. See also Hoexter
and Lyster above n 18 at 136 who argue, with reference to English
law, (In Re Golden Chemical Products
Ltd [1976] Ch 300 and Carltona
Ltd v Commissioner of Works and Others[1943] 2 All ER 560) that Shidiack
would be decided differently today.

26
In Mathipa v Vista University and Others 2000
(1) SA 396 (T) at 401-2 for example, a person was appointed
by the incorrect official. The correct official later tried to
ratify the appointment. De
Villiers J held correctly that it was
impossible to ratify an action performed without authority.

28This has become known as the ‘Carltona
principle’. The English Court of Appeal in Carltona
above n 22 at 563 held that in
order to allow the smooth functioning of government, Ministers are
always entitled to have their functions exercised
by officials in
their departments as it is the Minister that remains responsible to
Parliament. This rule is however confined
to delegation within
government departments. See also Lewisham
Borough Council and Another v Roberts [1949]
1 All ER 815 at 829 and Wade and Forsyth Administrative
Law 8 ed(Oxford University Press, New York
2000) at 325.

29King-Emperor v Benoari Lal Sarma [1945]
AC 14; Jackson, Stansfield and Sons v
Butterworth [1948] 2 All ER 558 at
564-66. See also Craig Administrative
Law 5 ed (Sweet and Maxwell, London
2003) at 523 and De Smith, Woolf and Jowell De
Smith, Woolf and Jowell’s Principles of Judicial Review (Sweet
and Maxwell, London 1999) at 227 and 233.

32
The only time the Supreme Court of Canada has considered the
sub-delegation of legislative powers was in Reference as to the
Validity of the Regulations in Relation to Chemicals [1943] SCR
1 where it found that emergency war-time legislation permitted the
delegation of regulation-making power. This decision should however
be confined to the exceptional circumstances of the case. See
Dussault and Borgeat Administrative Law: A Treatise 2 ed,
Volume I (Carswell, Toronto 1985) at 416. The majority of Canadian
authors argue that legislative powers are less likely
to be
delegated by implication. See id at 416 Jones
and De Villars Principles of
Administrative Law 3 ed (Carswell,
Toronto 1999) at 140; Mullan Administrative
Law 3 ed (Carswell, Toronto 1996) at
194.

34
See for example Credite Suisse and Another v Waltham Forest LBC[1997] QB 362; Cohen v West Ham Corporation [1933] Ch 814 at
826-27; R v Board of Assessors of Rates and Taxes of the City of
Saint John(1965) 49 DLR (2d) 156; Labour Relations Board of
Saskatchewan v Speers and Regina Undertakers Employees Federal Union[1948] 1 DLR 340. According to Wade and Forsyth “[t]he vital
question in most cases is whether the statutory discretion remains
in the hands of
the proper authority, or whether some other person
purports to exercise it.” Wade and Forsyth
above n 28 at 316.

37
In Ellis v Dubowski [1921] 3 KB 621it was held that a County Council could not delegate its power
to decide whether a film could be shown by declaring that any film
approved by the British Board of Film Censors, a private body, could
be shown. Similarly, a Canadian Court has held that a by-law
requiring owners to build fences around their swimming pools that
contained the additional requirement of the consent of neighbouring
landowners, impermissibly delegated the municipal council’s power
to private land owners. Re Davies and Village
of Forest Hill [1965] 1 OR 240.
The court in Michie v M.D. of Rocky View No 44 et al(1968)
64 WWR 178 (Alta) at 182-83 declared invalid permits issued on the
condition that they complied with requirements set by a private
entity.The delegation has been found to be unlawful in each
of these cases although the fact that the body is private has never
been the
reason given for the decision.

The Council may from time to time on application made
to it by the lender, or of its own accord, review the conditions
pertaining
to the registration of a lender or may impose further
conditions and may for this purpose inquire into the business of the
lender.
The Council shall first provide the lender with an
opportunity to make representations to it before imposing more
stringent conditions.”

The Council may act in accordance with Rule 3.15 above
if the lender –

is in breach of any provision of these Rules;

fails to comply with any condition of registration;

acts in a manner which is likely to bring the money
lending industry or the Council into disrepute;

ceases to trade or resolves to do so;

fails to discharge its debts promptly and in full;

is or becomes subject to substantially the same
ownership, management or control as a lender whose registration
has been cancelled
or which is not registered with the Council;

fails to pay any amount owing to the Council;

fails to respond within 20 (twenty) business days
from the date of the recorded delivery of a letter from the
Council to the
lender;

provides any false or materially incorrect
information to the Council or fails to disclose any material
information to the
Council;

fails to comply with any instruction of the Council;

fails to pay its annual registration fee within 20
(twenty) business days after having been notified that it is due;

fails to comply with any penalty imposed by the
disciplinary committee;

fails to pay a fine before the due date for payment
thereof as contemplated in Rule 9;

fails to provide any documentation notified by the
Council within 20 (twenty) business days after having been
requested, or
such other reasonable period as notified by the
Council in any particular case;

The Council may from time to time amend these rules by
giving written notice to the lender of the proposed amendment, the
reasons
for the amendment and the date as from when such amendment
shall become effective. The Council shall with due regard to the
effect
of such change ensure that the lender shall be given
sufficient notice so as to enable it to comply with any such
amendment. The
lender’s consent shall not be required for any
amendment to the Rules for it to be effective. The lender which
does not accept
any amendment which may materially affect the lender
may apply to the Council for the cancellation of its registration.”

48In paragraph 3 of his judgment Yacoob J
identifies the dispute as relating to whether the Constitution
applies to the rules and
if it does, whether they are consistent
with it.

49In paragraph 25, Yacoob J identifies the issues
before this Court as being fourfold: (a) whether the Constitution,
the legality
requirement and the privacy protection in particular
applies to the rules and whether the Council exercised public power
or private
power in making the rules; (b) if the Council exercised
public power, whether that power was legislative in character in the
sense
of the law-making powers exercised by Parliament, the
provincial legislatures and municipal councils; (c) did the Council
have
the power to make the rules pursuant to the Exemption Notice;
and (d) the issues arising from the right to privacy.

50Section 15A was inserted into the Act by section
8 of the Usury Amendment Act 100 of 1988 and substituted by section
6 of the Usury
Amendment Act 91 of 1989.

51
The first exemption notice was published in Government Gazette 14498
GN 3451, 31 December 1992.

53
Item 2.1 of the Notice provided as follows: “The category of money
lending transactions is exempted on the conditions that –

the
entity concluding the category of money lending transaction is
registered as a lender with a regulatory institution; and

the lender shall at all times comply with this
notice.”

54Usury Amendment Act 10 of 2003 s (1)(d) added the following
definition: “‘regulatory institution’ means a legal entity
approved as such by the Minister
in terms of any regulation or
notice promulgated under this Act”.

(b)
together with the total charge of credit which is owing by the
borrower, shall be paid to the lender, whether in instalments
or
otherwise, within a period not exceeding 36 (thirty six) months
after the date on which the sum of money has been advanced to
the
borrower; and

(c)
is not paid in terms of a credit card scheme or withdrawn from a
cheque account with a bank registered in terms of the Banks
Act,
1990 (Act No. 94 of 1990), or a mutual bank registered in terms of
the Mutual Banks Act, 1993 (Act No. 124 of 1993)”.

65R v Panel on Take-overs and Mergers, ex parte Datafin plc and
another (Norton Opax plc and another intervening)[1987] 1 All
ER 564.

66See the discussion in Hoexter, Lyster and Currie
The New Constitutional and
Administrative Law Volume II (Juta,
Cape Town 2002) at 98; and De Ville Judicial
Review of Administrative Action in South Africa
(Butterworths, Durban 2003) at 45.

68See for example Attorney-General,
O.F.S. v Cyril Anderson Investments (Pty) Ltd1965 (4) SA 628 (A) at 639C–D and the discussion in Hoexter,
Lyster and Currie cited above n 19 at 98; De Ville cited above n 19
at 45. See
also n 15 above and the discussion in Wade and Forsyth
Administrative Law
9 ed (Oxford, New York 2004) at 312. Wade and Forsyth cast doubt on
the legal status of the principle. “In reality there is
no such
principle; and the maxim plays no real part in the decision of
cases, though it is sometimes used as a convenient label.”
They
argue that the rule is secondary to the primary task of statutory
interpretation in each case to determine whether, properly
construed, the statutory authority permits delegation of the powers
it confers or not. However their statement that the principle
does
not exist cannot be accorded with South African authority.
Nevertheless in South African law too it is correct that the
overriding issue will always be whether the relevant statutory
provisions permit delegation of the powers conferred.

“The Minister may withdraw the approval of a
regulatory institution should it fail to fulfill the functions
contemplated in paragraph
1.6 . . . and shall publish such
withdrawal in the Government Gazette.”

“The
Registrar may, subject to such conditions as he or she may
determine, delegate or assign any power or duty conferred upon or
assigned to him or her under this Act to any person, but such
delegation or assignment shall not prevent the Registrar from
exercising
or performing the relevant power or duty himself or
herself.”

“A provision of the Bill of Rights binds a natural or
a juristic person if, and to the extent that, it is applicable,
taking into
account the nature of the right and the nature of any
duty imposed by the right.”

80Neither the High Court nor the Supreme Court of
Appeal considered this aspect of the argument.